When the foreign ministers of eight Commonwealth countries meet at Harare, Zimbabwe, this week to review the effectiveness of their sanctions against South Africa, one item on their agenda should be an unusual, $600-million indirect loan to that country’s leading resource conglomerate by the Bank of Nova Scotia. What makes this transaction bizarre is that External Affairs Secretary Joe Clark, who is chairing the Harare conference and who has led the Commonwealth battle against apartheid, has not taken a stand against the loan, however indirect its connection with South Africa.
The Bank of Nova Scotia loan is part of the financing for a $4.4-billion acquisition attempt by Johannesburg-controlled Minorco SA of London’s giant Consolidated Gold Fields PLC, the largest takeover bid in British history. Also involved in the syndicate backing the complicated transaction are Geneva’s Swiss Bank Corp., New York City’s Chemical Bank and West Germany’s Dresdner Bank. Although Minorco itself, which is a Luxembourg-based shell company, has no South African holdings, it is owned by the Oppenheimer family, which controls the giant De Beers diamond monopoly through Anglo American Corp.
The Oppenheimer empire of 600 corporations boasts total assets of more than $20 billion and employs 800,000. The current offer to buy 70.6 per cent of Consolidated, which would create the world’s largest gold mining operation, is part of the Oppenheimer family’s sophisticated attempt to diversify its holdings and move its assets beyond the tensions and violence of South Africa. (The South African Rembrandt tobacco giant has transferred its controlling stake in Rothmans International to a similar Luxembourg postbox.)
Said Nicholas Douloff, who speaks for Scotiabank on the issue: “We have made no loans to South Africa, their agencies or the country’s private sector since 1979. All that remains outstanding is a $ 12-million debt, which the
There is something particularly bizarre about the Bank of Nova Scotia’s role in a loan that will benefit white South Africans
South African government has promised to review in 1990.” He added, “In the Minorco case, we don’t feel we have breached our own guidelines: the company is headquartered in Luxembourg and has assets around the world. External Affairs in Ottawa agrees.”
The American partner in the deal, the Chemical Bank, has come under intense pressure to alter its policy. Georgia Democratic congressman John Lewis, among others, has attacked the bank for “running afoul of the spirit of anti-apartheid” and accused its chairman of “lacking sensitivity to the moral issues.” Following recent protests, the New York City bank agreed not to participate in similar future loans, but the bank’s chairman contends that it cannot legally back out of the current arrangement. The money is in place, including the Canadian funds, because there has yet to be an outcry on this side of the border.
Minorco already controls the Engelhard Corp. (platinum) in the United States as well as Hudson Bay Mining & Smelting in Canada, which operates copper, zinc, gold and silver mines at Flin Flon, Snow Lake and Leaf Rapids, all in northern Manitoba. The company also owns 36 per cent of Charter Consolidated, a
British heavy machinery manufacturer, and a 29 per cent block of Consolidated Goldfields. Despite its Luxembourg domicile, through a spider web of associated companies and cross shareholdings, Minorco is 71-per-cent owned by the Oppenheimer family. Although the Oppenheimers and their Anglo holding company have advocated limited domestic social reforms in South Africa, the London-based AntiApartheid Movement recently concluded that “Anglo’s wealth has been built on low labor costs and monopolies, both integral elements of the apartheid system. For all its rhetoric, Anglo’s economic interests are too tied up with South Africa’s white community to allow it to promote policies with any real difference to those pursued by the government.”
The Anti-Apartheid Movement is convinced that the current move, which involves the Scotiabank financing, is part of a joint Anglogovemment strategy to create corporate structures that can counter the threat of future boycotts and alleviate the impact of existing sanctions against South Africa. “A takeover of Consolidated Goldfields by Minorco,” the organization claims, “would represent a Trojan horse for South Africa situated at the very heart of Britain’s financial and industrial establishment.” The bid was cleared last week by Britain’s Monopolies and Mergers Commission and now must be accepted by Lord Young, trade and industry secretary. The commission was investigating not only the possible effects of the proposed buy-out on competition, but rumors of alleged illegal share-dealing as well.
While Minorco executives express confidence that they will eventually grab control of Consolidated, Washington may intervene because the intended takeover would move Newmont Mining, America’s largest gold producer, under South African ownership. Newmont, in turn, controls Peabody Holding, America’s largest coal company. The Oppenheimer-De Beers syndicate, already the world’s largest gold producer, when combined with Consolidated, would give the South African company control of more than one-third of the nonCommunist world’s gold output—as well as 41 per cent of the West’s supplies of zircon, critical for building U.S. submarines.
It is difficult to judge objectively from this distance just how harmful the takeover might be, but London’s Guardian newspaper has revealed that between 1981 and 1986, Anglo “has been running a complex tax avoidance scheme through a network of companies in Holland and Luxembourg, which saved the company at least $24 million in U.K. taxes alone.” The newspaper claimed that it had documented the company’s ability and expertise in setting up a series of paper companies among which it could shift millions of pounds’ worth of assets as soon as tax authorities appeared to be closing any existing loopholes.
At least some of those charges have probably been exaggerated in the sensitive and propaganda-filled atmosphere of the battle against apartheid. But the Minorco case history appears to contradict the Bank of Nova Scotia’s carefully cultivated image as a bank with a social conscience.
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