Special Hearings — Business Hearings — 1997-11-13

DESMOND SMITH: Chairperson and members of the Commission, also just for the record, it's 25 to now and not half past.
 On behalf of SANLAM's board and management, may I thank you that from the many representations and submissions you got from business, we have been given the opportunity to speak to our submission.  
 If it's okay with you, I will speaking in English.  If you don't understand, we do have an Afrikaans submission that you can look at.  
 With your permission Sir, I'd like to speak to our submission, but furthermore I was here yesterday.  I would like to comment on one or two issues which were raised yesterday afternoon which I'm - I believe I can add a further perspective to.
 With regards to our submission, we, the individuals constituting the present board and management of SANLAM, acknowledge that in conducting its business, SANLAM functioned in a political and social environment which violated human rights on enormous scale and was fundamentally wrong, immoral and unjust.
 We furthermore acknowledge that this environment caused untold hardship, suffering and grief to the people of colour and further that SANLAM as a member of a privileged group benefitted from Apartheid in one way or another, relative to members of disadvantaged groups.
 Chairperson, this unjust system which I have just described and the suffering it caused people of colour, leave us with a deep sense of sadness and regret.  Regret and sadness that we, the enfranchised citizens of the country allowed the system of hurtful, institutionalised violations of human rights to be established and developed in this country. 
 In our submission we refer to a specific issue which I should like to address.  Steve Biko was tortured in a SANLAM building in Port Elizabeth.  I refer to paragraph 13 of our submission.  In cases where the security police of the former Government were tenants of SANLAM property, we had no access to such offices.  
 As is the case with the current Government, our leases specified in respect of such properties and I quote:
"The lessor is aware of the lessees prescribed security measures which will at all time be adhered to.  No access to the premises will be allowed unless the lessees prior permission is obtained."
The end of the quote.
SANLAM thus had no prior knowledge of cases of violation of human rights on its properties and like the general public we had to rely on available public information through media reports on that time - at that time the allegations against security police actions.
 As these violations on our properties and others as are revealed in courts and through this Commission, we share in the perplexity and the pain of the nation and we regret that such atrocities were perpetrated and furthermore;  that our property was misused by the security police of the previous Government.
 We distance ourselves from any violations of human rights and we convey our most sincere condolences to the victims of such violations in our buildings.  Also to those of bomb explosions on our properties in Amanzimtoti and elsewhere in our country.
 Chairperson, although the submission reports to be that of SANLAM it is really an expression of sentiments by individuals.  I and individuals constituting the present board and management of our organisation.
 A corporation such as SANLAM is a legal entity with no independent emotions.  It's decisions and actions are taken by individuals who constitute the various levels of management, non-executive as well as executive.
 In making this submission, we as the present board and generation of management are really attempting to articulate what we consider were the factors and circumstances which influenced and prompted ourselves and preceding generations of management in regard to the matters under consideration.
 This is a very difficult and complex task, because (a) there exists apart from the required, your minutes and similar documentation, no real reliable continuous corporate memory and (b) because various generations of management operated in different environments, were subject to different influences and had different insights.
 Furthermore, one must remember that a generation span in corporate life, i.e. of members of the board and senior management, is mostly much shorter than a generation span of human beings.
 What is my task today?  Chairperson, in view of the acknowledgement and admission we have expressed earlier on, it seems that the fundamental question which calls for an explanation today is, why did the individuals constituting SANLAM's management over the years, in their capacity as management, failed to take a strong outspoken and vociferous stand against the injustice of Apartheid.
 It is this question we attempt to address in our submission against the background of historical and environmental prospectives.
 In paragraph three of our submission we say, and I quote:
"We hope to shed light on the interaction of SANLAM as business organisation with the realities of its environment, including inter-alia, the government of the day, which constituted not only the dominant political factor in the land, but also - and I believe Chairperson this to be a crucial issue - as a substantial customer.  A material factor on the business and economic terrain."
My I stress we advance these prospectives, not as an explanation - as an explanation for inaction, not as an excuse or a justification.
 May I furthermore say that what I wish to present is tabled with the view to contributing to learning and understanding - learning from and understanding the past and applying this to a better and more just future.
 A couple of comments of SANLAM and its environment.  The previous Government developed, institutionalised Apartheid since 1948, although its forerunner, segregation, had a colonial and historical origin long before that.
 The previous Government was predominantly supported by Whites and Afrikaans speaking people.  This explains why the so-called separate development policy was part and parcel of White community thinking at the time.
 In his presentation the AHI aptly put it in this way and I see they are here.  I hope they don't mind my quoting from their submission.
"The Afrikaans churches, newspapers, cultural organisations and the wider community broadly subscribed to the notion that separate development of the South African populations groups was seen as the best guarantee for overall justice and peace in this country."
SANLAM had its origins in this section of the community.  i'm therefore suggesting and admitting that many individuals in SANLAM board - SANLAM's board and top management undoubtedly supported the previous Government and its policy.
 If I may make reference to an issue that was raised before the Commission yesterday;  you do not as a businessman depart from home for the office in the morning, leaving your thinking, feeling, prejudices at home and suddenly transform into a different person.  You take your baggage along with you.
 The approach of the previous Government, Chairperson, turned out to be totally wrong, but undoubtedly tended to influence, re-assure and even lull earlier management into a sense of acceptance of the initiatives by politicians to establish institutionalised Apartheid.
 It is a fact that disillusionment set in over time.  In paragraph eight of our submission, we refer to the repugnance of many aspects of the Apartheid policy felt by individuals in SANLAM's management.
 May I just rectify a possible misleading expression in our submission.  The heading of paragraph eight is the "Demonising of Apartheid."  We mean by this;  what we say in the paragraph, i.e. that it became clear over time that Apartheid was immoral and unjust and became repugnant.
 A more accurate heading, which is reflected in an updated submission would be 'The repugnance of Apartheid'.
 I concede with hind sight that these noises and objections were much too weak from SANLAM's managements and board and I wish to express my regrets.  However, I should like to proceed to attempt to explain why SANLAM's voice - or for that matter, the voices of its management were not as loud and critical as one now would have wished.
 A couple of comments on our relations with the political establishment.  Chairperson, it is our conviction that the management of an individual business organisation and I stress, an individual business organisation, cannot in their capacity as managers of that organisation afford to attempt, nor do they have the power or mandates in my view, to influence politicians by publicly attacking their policies.
 I submit that it is accordingly unrealistic to expect of those managements that they should act as a watch dog against violations of human rights.  We make the point in our submission that this is really a political matter and business has a total different function in society, i.e. to create wealth.
 Furthermore, Chairperson, the Government is so powerful and dominant in economy of our country, that individual business cannot afford to cross swords with politicians.
 I refer to our submission, paragraph ten.  I believe that this is an extremely important issue which I - will have to - which will have to be addressed in future and for which I, at this stage, do not have an answer.
 The dual role of the governing party in its capacity as government on the one hand and a major participant in the economy on the other, is of concern.
 This is surely not the forum to debate the issue of a free market approach to the economy as opposed to alternatives and the Government's role in this regard.  The fact is, Sir, that the Government and the governing political party did and still do, in their capacities as government and political party, play a dual role, namely that of a governing legislating regulating entity, but on the other hand a major direct participant in economy and as such a substantial client of many enterprises in which it also has a substantial hand in regulating.
 This undoubtedly, and I speak from personal experiences, places business enterprises in an unenviable situation.
 SANCOB in their submission, paragraphs 5.4 and 6.1 also refers to this vulnerability of and individual business and individuals to retaliation by the authorities.  An equally important consideration is that a company such as SANLAM, operating nationally, has members, a work force in the market which covers the whole spectrum of political thought.  Since a business has to be successful to survive, it cannot afford to estrange any of these stake holders.  I refer to paragraphs 12 and 13 of our submission.
 In the press, Chairperson, I see, that mention is made by a member of the present Government;  that a common decency requires the humility of saying I was wrong.  It was because of our cowardness and self-interest that we did not speak up.  As far as he refers to SANLAM as a company as opposed to the individuals constituting senior management, I agree;  that the company acted in self-interest and in the interest of its stake holders.
 It is after all the legal and moral duty of a manager to act in the interests of the company and its stake holders.  He may not allow his own actions in promoting his own views to damage the interest of his company.  SANLAM, Sir, and I believe this is important to you, is a mutual company and this is of particular importance.
 Without share holders, our policy holders and members own our company and control it with all its assets.  Any set backs suffered by the company would therefore also have reduced the wealth of our members, many of the disadvantaged groups.
 It is our position, Chairperson, that the protection of human rights should be sought in the elements of society, other than individual business enterprises.  In the business arena, associations of business enterprises, for example the AHI or SANCOB could perhaps be expected to put pressure on Government, should they infringe human rights.
 We say this, because due to their structure such associations are not as vulnerable to retaliation as our individuals and individual enterprises.
 We also point out in paragraphs 26 - 29 of our submission that the necessary check and balances should be put in place.  This can only be done by Parliament, the legislator.  We deal with these aspects more fully in our submission.
 In the process of re-addressing imbalances in society, SANLAM I believe took bold and pioneering initiatives, which Mr Chairman, is evidence of a serious commitment to upliftment and reparation of the disadvantaged communities.
 We elaborate on these in paragraphs 22 - 25 of our submission.  In view of the time I will not go into any further detail.  
 May I, before concluding, just address two issues, Chairperson, which were raised yesterday and these deal with the Government debts and the Government employees pension fund.  A submission was made here regarding a number of alternatives in dealing with Government debt.  
 The most (indistinct) or the most extreme being that Government debt be written off in its entirety.  I'm not in a position to comment on what the reaction would be should foreign debts be written off.  All I can imagine, I shudder to think what our borrowing capacity internationally would be should we do that.
 As far as the domestic situation is concerned I also cannot comment on behalf of the public investment commission to which was referred.  I cannot believe - speak on behalf of commercial institution which were referred to yesterday.  I believe its particularly important to note that those commercial institutions are not only bank and life insurance companies, but those are also pension funds repressing the interests of all the workers of this country.
 Three comments if I may?  Firstly, it's important to understand and appreciate that we did not of our own free will invest in a Government debt.  There were legal and statuary requirements which, up to a stage, forced us to invest up to 50 percent of our assets into Government debt.
 If I may refer to a competitor's submission yesterday, the Old Mutual who was here;  in annexure B they have a number of extracts from their Chairman's addresses from 1960 - 1994 and as far back as 1961 the comment was made by their Chairman against prescribed - so-called prescribed investments which were deemed as a form of indirect taxation, which in fact they were and still are.
 A second point is that should in respect of banks, the investments they have in Government stock, be written off, I can assure that Dr Stals will have to come and reply here again on why a number of other banks are being given life boats or bailed out.
 As far, point three, Chairman, as far as assurance companies and pension funds are concerned, it's important to note that the beneficiaries of those institutions of policy holders and members of pensions funds;  any intervention such as those advocated yesterday, will have a major impact on the benefits and beneficiaries of those funds.
 This is an issue which was of major importance prior to the election in 1994 where members of pension funds were concerned that the potential writing off of Government debts and also were concerned about the possibility of the so-
called nationalisation of those funds.  
 The situation was so critical that our now president, Mandela, put out a document to all members of pension and provident funds, reassuring them and I won't go through the document, that an ANC Government will make sure that your money is secure and that you will receive all the benefits you are entitled to when you retire.
 Chairperson, I say this just to indicate that this is an extremely complex issue and a very far reaching issue that should be dealt with with great circumspection. 
 Secondly, a number - one or two comments on the Government pension funds.  A reason was put forward why shortly before, towards to the end of the '80', beginning of the '90's, efforts were made to fund the Government pension fund to a larger extent that it had been in the past and the notion was presented here that prior to that the Government pension fund was based on a pay as you go approach.
 This is in fact, I believe, not true.  That the intention all along was to have a funded scheme and that after one of our previous chairmen, Dr Andreas Wassenaar's book, ON ROUTE TO FAIRY LAND, in which the Government pension fund, or where the management of it was attacked, efforts were made to reassure the employees of Government by  commencing to fund those schemes. 
 I would advocate that we not look at approaching the Government pension fund on a pay as you go bases.  One only need look at the experience in Europe in respect of national pension funds where they were in fact approached on that bases and one finds that it is very easy for politicians to make changes to those funds to enhance benefits and reap the early political benefits of those enhanced benefits that members will be receiving.  The financial implications only being moved to future generations who will have to bear the burden of those funds.
 Chairperson, in conclusion, the process of reform which culminated in the release of our President, Mandela, and indeed also the revelations at the hearing of this Commission, have I am sure, convinced all right thinking citizens of the country as they convinced me and my colleagues of the importance of being ever-vigilant in the protection of human rights.
 I conclude by expressing the sincere hope that the TRC through its activities will in fact succeed in its aim of healing the deep wounds of the past and achieving reconciliation and national unity.
 We wish you every success.  Thank you, Sir.