Sun International has announced a R604 million (US$89.3 million) deal that will take the group’s black ownership to over 25%. The deal, which adds a further 7% to its previous Black Economic Empowerment (BEE) ownership, is part of an ongoing Sun International policy that began a decade ago. The Broad-Based Black Economic Empowerment Act 2003, with its charters, targets and scorecards, is the result of the African National Congress (ANC) aim outlined in 1969 to ‘deracialise business ownership and control completely through focused policies of Black Economic Empowerment,’ ending the domination of business activities by white people and the exclusion of black people and women from the mainstream of economic activity.

BEE remains a controversial method of dealing with the legacy of apartheid. The government has said that it accepts that ‘the process of dealing with discrimination may ultimately lead to the development of a new black bourgeoisie’ and critics claim that BEE achievements should be measured by the improvements in the lives of ordinary South Africans, not the small group of well-educated and well-connected black businessmen benefiting from the Act. Under the terms of the charter, firms should increase percentages of black participation to about 15% by 2009 and around 26% by 2014.

As a pioneer of the new order in the shareholding and management of tourism assets, Sun International has created new opportunities for previously disadvantaged South Africans by the development of new equity partnerships. BEE is an integral part of the group’s business strategy and the company claims that its human capital plays a crucial role in its success and growth, and that it is firmly committed to promoting equal opportunity and skills enhancement. At the end of last year there were no Black (under South African terminology this includes Africans, Coloureds and Indians) women in Executive Management positions and Black men accounted for only 7.55%. However, in Middle and Junior Management and Supervisory positions Sun International has an increasing number of Black employees heading up the corporate ladder.

Peter Bacon, CEO of Sun International, retires at the end of June 2006 and his successor will be David Coutts-Trotter. The newly created holding company Dinokana Investments will pay R392 million (US$58 million) for the 7% deal announced yesterday. The balance will be paid as a one-off, upfront payment by Sun International shareholders. The shares in Dinokana have been allocated specifically to parties with a link to the North West province, as well as a large portion to Sun International's current and future employees and black management. Two Dinokana directors have been proposed for appointment to the Sun International board.

According to David Coutts-Trotter, Sun International views BEE as “a value-creating strategy, designed to create realistic, meaningful and enduring partnerships. Sun International believes that effectively and properly implemented BEE will be a key driver of sustainable economic growth and transformation in South Africa." The concern with which some foreign investors view South African companies because of the government’s BEE initiative, seeing such investment as ‘high-risk,’ may be unfounded, but there is still much debate on whether there is real empowerment in the multi billion dollar South African gambling industry. (E-11.08.05)

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