Losing without Accountability

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The merger between Time Warner and AOL, formerly America Online, was meant to combine entertainment with the internet. However, due to slow advertisers and a loss in market share, the value of AOL took a downturn and there was a goodwill write off amounting to $99 billion. This is the largest loss ever reported by a company. It should be noted that at the time Mr. Gerald Levin was Chief Executive Officer (CEO) of Time Warner and Mr. Steve Case was CEO of AOL. Mr. Levin resigned after being ousted by Mr. Case who was encouraged by Vice – Chairman Mr. Ted Turner. After changes in executive leadership particularly regarding the (Chief Operating Officer) COO, Mr. Case was eventually forced to step down as executive chairman. 

For AIG (American International Group) which largely focused on insurance the trouble started before the Financial Crisis of 2007-2008. During the Financial Crisis where it was the second largest loss-making company. In 2005 the company was faced with fraud allegations which led to Mr. Hank Greenberg being at the center of the accounting scandal. There was a $1.6 billion fine. The company had to restate its financial statements from 2000 until 2003. In 2005 the CEO (Mr. Hank Greenberg) was replaced by Mr. Martin Sullivan. The company then ended purchasing 21st Century Insurance. Under Mr. Sullivans leadership AIG started making investing errors such as: firstly, investing in instruments such as derivatives but without hedging the risk, secondly it spent a lot of money buying mortgage-backed securities.

In 2008 Mr. Sullivan was ousted by three other directors. In 2008 AIG reported losses and a falling share price. Mr. Sullivan was replaced by Mr. Willumstad which didn’t last long as the US government asked him to step down and he was replaced by Mr. Ed Liddy. In 2009 Mr. Liddy was replaced by Mr. Bob Benmosche. The Financial Crisis heavily impacted AIG to the point where there was a liquidity crisis. The credit default swaps that the company had invested in were based on collateralized debt obligations which declined in value during the Financial Crisis. There was $441 billion worth of securities which were originally rated triple A the highest rank. Of those securities $57 billion were based on subprime loans. When AIGs credit rating was downgraded it had to pay additional collateral which led to a liquidity crisis and essentially bankrupted the company by $85 billion.

In our own country of South Africa, we have recently encountered companies which have failed to earn a profit or be operational. The most notable of these companies is Steinhoff International although founded in Germany the company was listed on the Johannesburg Stock Exchange. According to the Association of Certified Fraud Examiners, JP Morgan Chase were suspicious of Steinhoff’s financial statements as early as 2007.

So what exactly happened with Steinhoff? Basically Steinhoff was a holding company which owned several businesses and as a result Steinhoff used this business structure to manipulate its financial statements. The company made intercompany loans which resulted in the inflation of the profits made by the company and the asset values. The profits were inflated by $7.4 billion. This act of fraud took place from 2009 until 2017. Another, issue was the independence of the auditor, Deloitte which signed off on these financial statements.

So what was the outcome? In 2015 German authorities raided the company and in 2017 Steinhoff CEO Markus Jooste admitted to the mistakes and resigned. The stock price fell around 97%. There was also a change in auditors to PwC. It should be noted that at the time of writing this in 2024, Mr Jooste had died and the Chief Financial Officer during the years of fraud Mr Ben La Grange was sentenced to 10 years in prison.

Tongaat Hulett an agriculture business had a similar issue facing it. The companies key executives inflated the profits over a number of years, this is in particular to its property division business. The purpose of inflating the profits was to reward its executives with bonuses. When, the fraud was publicised the company had to restate its financial statements which led to a R12 billion write down. As a result the company was over leveraged by R6.6 billion. The company is currently in  business rescue, experts posit that most of the debt to banks is about R4 billion is interest. There was also a change in auditors from Deloitte to PwC.

The executives former Chief Financial Officer Murray Munro, former Property Division Head Michael Deighton, Finance Section Head Rory Wilkinson; Legal Executive Kamlasagrie Singh and Finance Executive Samantha Shukla, and former Deloitte Auditing Partner Gavin Kruger have been charged with defrauding the company to the tune of R2.5 billion. The JSE fined the company R7.5 million and the Financial Sector Conduct Authority (FSCA), which is the regulator in South Africa, fined the company R20 million. The real consequence and heartbreak are that 8000 jobs that have been lost.

In conclusion lately in the public discourse there has been a conversation around privilege particularly by members of society who have not had a long-term period of financial disadvantage. But privilege is not limited to what you can afford it is also extended to what society permits regarding behavior. We should also start looking at the privilege within structures which allow the freedom for certain groups to behave with impunity and the consequences are not just a note in the financial statements. 

What am I basically saying, the two examples from the U.S ended up with major losses and no one was essentially held accountable it was just a bad business decision. In South Africa, there has been some effort of a form of accountability by the members being taken to court. However, in the case of Steinhoff people lost their life savings and that cannot be recovered by a prison sentence. For Tongaat there is a court process in place but it will not restore the 8000 jobs lost to people who may have only been able to have the skills to acquire that kind of job. 

Our struggle is not for equality but to surpass that and excel

AA-MLK-Civil-Rights-police-actions2Growing up South Africa post the end of Apartheid and having read of the civil rights movement I only heard tales of the police brutality most from my father and grandparents in South Africa who were directly affected I have found myself disenchanted by the idea that those who made an oath to protect could be the ones displaying such cruelty and savagery. I am no longer disenchanted and have come to realize the jarring truth that the protection and privilege of being kept safe may not be viewed to be for us all. The true story within all of this will be how we deal with the issues behind the symptom of the problem. If we continue to teach and talk about our predecessors and current victims we could inspire change.images.jpegimages-1.jpeg

2015 year news

The biggest news story in South Africa was the currency of the country and  its depreciating nature and whether or not the US dollar will appreciate. This post will best explain the downfall of the rand without the technical language used in mainstream news articles. Basically since as early as June there were reports and uncertainty about the rand based on the fact the US economy was getting stronger. This affects the behaviour of investors, one would think an investment would be a long term commitment but alas it is dependent on the strongest and most stable economy therefore naturally investors are more attracted to the re-emerging market. This weakens the rand and since the rand is not a currency based on a long term plan hashtag just saying, the rand is not based on a goods producing market therefore a weak rand means an inability to buy imports as much this delays the flow of the economy and the flow of money. A weak rand in South Africa translates to the sort of panic that might exist in the government cabinet after an unpopular decision is made. The success of the US dollar was built on the rumours which surrounded the fate of the currency : the slowdown in China for the demand of minerals, the rumour of an increase in the federal reserve rate. There were other instances which affected the rand and in economic terms made it more volatile such as the South African financial budget speech where the top financial leaders of the country decided to give a pay increase during a recession mind you to state workers. There was also a major student protest which reflected the instability of the country by having public institutions halted by a decision to not increase school fees this showed the lack of control in the country as well as the non delivery of funding made 6 years prior for instance to have free education. This made investors uneasy and the lack of stability in the country was reflected in the rand. Overall the year which seemed like it would be hopeful set the country back and there was a great loss of confidence in the leadership, The rand has survived recessions and great changes in the country but only time will tell if it can survive the reliance on foreign direct investment and the reliance on more developed nations.

The Revolutionary Che Guevera

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After reading Ernesto Che Guevara’s autobiography by Jon Anderson Lee there is a lot powerful ideas and experiences worth noting. A great part of what Ernesto Che Guevara will mostly remembered for is his struggle to liberate Latin America and Africa from colonial oppression and the results of the after effects of colonialism. He was an avid enthusiast of communism and was heavily influenced by the theories and practices of communism to the point of extensively living his life in that way. As an African child growing up in a post segregated and politically liberated society the thoughts of Che Guevara have ignited me to question the lifestyle I lead and whether it is truly the utopia which was fought for and whether I am enjoying the freedoms of living and working in a society with my best interests truly at heart.

One of the strong attributes to Ches success…

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The Revolutionary Che Guevera

After reading Ernesto Che Guevara’s autobiography by Jon Anderson Lee there is a lot powerful ideas and experiences worth noting. A great part of what Ernesto Che Guevara will mostly remembered for is his struggle to liberate Latin America and Africa from colonial oppression and the results of the after effects of colonialism. He was an avid enthusiast of communism and was heavily influenced by the theories and practices of communism to the point of extensively living his life in that way. As an African child growing up in a post segregated and politically liberated society the thoughts of Che Guevara have ignited me to question the lifestyle I lead and whether it is truly the utopia which was fought for and whether I am enjoying the freedoms of living and working in a society with my best interests truly at heart.

One of the strong attributes to Ches success as a patriot for fighting for the basic needs of the common Latin American man is the absolute and totalitarian nature he applied his beliefs to his life and allowing them to be dominant enough to lead the other components which will develop once the fundamental change has taken place to cope with the effects of a long lived rule which have dominated the mental and physical presence in Latin America. Apart from influencing his behavior and mindset the events of the revolution also affected his perception on social matters such as religion at one point Che writes “ I am not Christ or a philanthropist I am the contrary of Christ I fight for the things I believe in, with all the weapons at my disposal and try to leave the other man dead so that I don’t get nailed to the cross or any other place”. This ruling was also known as imperialism. At first Ernesto was reluctant to joining the political uprising, which would be later known as the Cuban Revolution. By fulfilling his personal need to become a part of a group of people and comradeship Ernesto further pursued his interest in politics by reading about Marxism and Engels and Lenin. After pledging himself to the revolution Che discusses that the concept of I has disappeared and replaced with the concept of us. One of the factors, which led to the historic change known as the Cuban revolution, is the timing of the period, which Che was living in. During the late 1950s there was a cultural change occurring throughout the world and many leaders of those revolutions were still alive so many of their theories were being practically demonstrated. Another possible cause of the power of the revolution was the Soviet Union, which was an example of the type of cultural change, and economic change, which would offer some competition and opposition to the western powers, which dominate the economy and the direction of the political structure of certain countries. Another influence in the sort of political awareness Che had was the result of the change in his home country due to the election of Peron and although this did not initially influence his political frame of mind later on there would have similar aspirations for Cuba. The ways in which Peron resembled the radical change Che had hoped to see within his country and eventually throughout Latin America and Africa, was the focusing on employment of all people however Che was more revolutionary eventually believing that the only way to cultivate these regions is by having even the peasants become owners of land and being taught to grow that land and work on it to contribute to the financial structure of a country.

Throughout the guerilla war Che maintained a respect and an illustration of the effect of an educated fighter. There were many rules and laws, which Che enforced which enabled the soldiers to be disciplined and not distracted by the frustrations of war. As a result war crimes or exploitations such as sleeping with women and attacking the peasants for food or dominance. Che and his faction or camp tried to negotiate with the peasants and try to enlist them in the war by explaining them the purpose of the war and promising them the liberation from the wealthier corrupt farmers who monopolized the region by being ruthless and ruling with their own self interest as a priority. There was a great acceptance and support for the capital and western structure, which was placed specially in Cuba. There was little knowledge of the other economic structures, which could be implemented such as socialism, which would benefit the country for a longer period of time in securing the fundamentals for a country to be successful such as education, health and agriculture. Any knowledge, which was made available about such ideologies, was taught and received in a negative way for instance communism.

As a result communism was a greatly controversial subject and because of the superpowers which existed in the western hemisphere particularly the USA which opposed communism and had great influence on the trading market in Latin America most political decisions were made with their existence in mind. Most of the time Fidel Casto and his conquered government had to modestly propose the changes they wished to see in Cuba because of their concern of the USAs reaction and the way they could infiltrate their country through other political parties and supply them with arms to fight the governing regime. This sort of behavior led to the war between Vietnam based on a domestic separation, which was occurring between north and South Vietnam. This is the same superior behavior, which still exists and has kept the USAs mineral and agriculture-trading laws govern their interest in the social welfare of other countries. The goal to maintain peace especially with super power exporting countries like the United States prevented the cultural and physical revolution, which was driving Che Guevara.

A part of the great success which enabled Cuba to remain fulfilling its hypothesis on the structure which needs to exist in order for the entire country to produce to its maximum point without relying on one superpower dominating the country and legislation. Most of the people who were leaders or involved in the guerilla war were professionals of some capacity therefore they could further educate people of the theories which led to the war as well as further educate themselves in other fields in order to plan and have a vision for the country. Another winning point of the Cuban revolution is that the government was not obstructed initially there were still elections and people who were qualified for those jobs were elected. However in time the charisma and leadership of Fidel led him to declare that the people of Cuba will choose their president by voicing their choice without elections. One of the strong points of the Cuban revolution that helped to continue its momentum although trade among different countries was beginning to falter because of the threatening agenda Cuba had to be communist. Threatening to the USA who were concerned with the affect that may have on their trade relations as well as their military base in Guantanamo. The USA had been nervous enough to infiltrate the politics of Cuba with CIA secret agents willing to start a small guerrilla group against the Cubans who were trying to establish a government, which would modify itself economically, and politically from being dependent on a sole nation. The leaders of the revolution were thinking for the future of the Cubans to also not be monopolized by one country and the gentrification of one nation to have western culture especially the aspects, which are focused on trivial and empty engagements like gambling and prostitution. These activities like many other activities that are foreign exploit the common indigenous person and do not allow them to think beyond their own immediate satisfaction and it leads to self-destructive behavior. Che liked to target the peasants and teach them and fight for their rights to have a better opportunity to be more productive at a fair wage with the possibility to better themselves. In fact there is a saying that if you cannot explain Marxism to the simplest man then you did not understand it. Throughout the wars that were occurring in Latin America it was clear that the peasants were mostly abused to be pawns by either the governing power or the guerilla faction. The main focus of Ches cause with the peasants was to give them ownership of land and discontinue the harsh living conditions they were living in were they could easily be chased off their land or manipulated into being scared and moving away. One of the revolutionary disappointments to come from crucial struggle with imperialism and the last fighters for colonization is the way in which the most significant revolution in Africa was taking place, which was in Congo now known as Zaire. The Congolese who were later known as Freedom Fighters to Che were battling their government aided by CIA operatives for the eradication of imperialism. However because there was a lack a political goal there was no specific direction of complaint with the infrastructure and the governing laws, which needed to be changed. As a result most of the knowledgeable fighter were sent to exile and the rebel fighters were not trained properly fighting without the understanding of the purpose of the fight can lead to more people not willing to die for the benefits of future generations. There was also no real comradeship between the fighters. In addition to those problems there were still beliefs of witchcraft which governed logic and was often the end all of the reason why they were being killed or losing battles.

Overall reading about Che Guevara has taught me that at times a belief in something greater than you is the best way to determine if the cause of why something being done is worthy of being fought for and ultimately living for, no matter the cost in terms of social well being and the disapproval of others. A central theme throughout the book was compassion and modesty although Che was quick to judge people on their intellectual capability he was also able to acknowledge and appreciate the efforts of people to engage themselves in the struggle and act as the agents of change. However he was a fairly modest person never asserting himself as a leader based on his family background or his academic qualifications but rather allowing to be promoted or demoted based on his effort and contributions he was a very fair person who also did not distinguish himself racially as well. In fact he truly understood the human psyche and found that people who hold prejudices against others especially racial ones have a very intellectual capability and are still holding on to the western imperialist colonial mentality of segregating people in order to feel that one group is above another or a better supreme being than another. He comments that even his second wife and her family had these beliefs and it is the small-minded nature of the fading aristocracy that has been embedded into their mentalities. Personally it was disappointing to read about the manner of the fighting in Congo: the disorganization the irrelevance of logical and factual information the lack of accountability and the in house fighting without a clear reason there was a lot of personal indulgence and ego the need to be praised rather than the cause being placed at the forefront of glory. As an African this sort of behavior reflects the political turmoil that exists for Africans in terms of truly stating what any liberating fight was fought for in terms of stating end goals instead to be clouded with short term victories which will not last for later generations. The saddest part is the depiction of the struggle in Congo is still true to this day with no real written history or organized change instead it is as if the same people who are in the position of power are exploiting the very people who put them in that position because there is no real education plan or understanding about the neocolonialism which governs them.

Democracy 20

I have been recently following the introspective flashback on the 20 years of political democracy which has existed in South Africa.The show focuses on several sectors of governmental industries and their allocation within the countries economic structure. The motivation for this flashback is to educate citizens of SA on both the democratic and voting process.

The series has been targeting remote areas as well as the two largest financial inputs within the gross domestic product. One of the remote areas in comparison to the central business districts of the country was the Free State. There has been an outreach towards the people of the Free State based on population size there is a large population which is active in terms of voting however there has also been a history of inefficient behaviour on the part of the IEC which has in the past discouraged voters, this year the voting regulations have enforced a more efficient way of voting which comes with more strict rules.

Although there has been great emphasis on voting the aim is to communicate that message clearly, an example of journalism on a wide scale being narrowed is the documentary taking an interest in the town of Tweespruit.One of the financial resources within the town is from farming, which is part of a larger industry in the country known as agriculture. This industry is vital mostly because a country that is able to feed itself is able to survive, food is part of the most basic needs in Maslows hierarchy of needs.Currently the industry is experiencing many changes some of these changes include more production of poultry and dairy farming abroad in Brazil.This results in a great disparity among farmers as well as a decline in new farmers who would not have the capital to start farming.

In order to grow the agriculture industry commercial farmers are extending across financial and racial boundaries,from this interaction there are talks of forming a union.Education on agriculture production is ongoing. The other industrial sector worth discussing was mining, which over the past 20 years in South Africa has served as the backbone of the economic component of the country. The industry is separated by many unions and has had a history of sustainability until 2012, where there were strikes held in Marikana. One event highlighted the very importance of mining which is the quality of life for the employees. Initially when the mining companies were being listed on the stock exchange share prices went up and companies such as Zama Zamas and the Mathomo Group where at the forefront in the gold sector. The Mathomo Group was selling at 10 000 000 at R2.00.

In the future mining companies will have to deal with issues such as nationalisation as a form if sharing the countries resource.In terms of the employee standards of living one issue which will be one of the focus points is the type of illnesses which can affect miners physically and mentally.One of the mining unions NUM is raising funds for the miners market.