Sunday Times (Johannesburg) - October 3, 2004

Anglo has stoically accepted the beating - recognising that because of its size and history, it is a lightning rod for government frustration.

But, the reaction to Mbeki's spat with Anglo over the issue of political risk in South Africa has been bigger than the case warrants.

Anglo has argued that the issue was sorted out with in 48 hours last weekend, but debate around it has since mushroomed.

The extent of the damage to Anglo's reputation is arguable, although the public relations offensive it launched this week indicates that the corporation feels damage control is warranted.

But, importantly, there has been no economic fallout for the corporation or South Africa.

Anglo's share price did not move significantly, the rand has strengthened, and the corporation reports that there was little reaction among London analysts and shareholders - where Anglo is domiciled, as Mbeki pointed out in his criticism of the company.

This in contrast to the huge fallout of the 2002 mining charter, whose premature leak caused Anglo's share price, and those of most resources companies, to slide to levels from which they are only now recovering.

This "storm-in-a-teacup" approach on the part of international and local investors could imply that the business community is getting used to the way in which Mbeki operates.

His understanding of economics is strong, but his relationship with business is weak.

Ironically, given the cause of the debate, this perhaps also proves the point of Anglo chair Tony Trahar that in the minds of investors, "the South African political risk issue is starting to diminish".

There needs to be a realisation on both sides that the relationship needs to be constructive, even if, at times, it is adversarial.

Mbeki should accept that there is no country without political risk and that international investors clearly still think there is risk in South Africa.

These perceptions need to be addressed openly by companies which operate here and which clearly have compelling reasons to continue to do so.

Sasol, too, opted out of the debate when Mbeki lashed out at it for citing black economic empowerment as a possible risk in its submission to the US Securities Exchange Commission.

Only this week, Patrice Motsepe's Harmony warned in its annual report of the risk from "political or economic instability in SA or regionally" and goes on to cite HIV/Aids, the exchange rate, costs associated with complying with the mining charter and proposed royalties on mining. This does not, however, imply that the company does not support transformation, but rather that addressing inequalities could affect its business.

Mbeki has not yet chastised Harmony, but if he did, it would be interesting to see if Harmony stands up to the challenge.

Companies should, if necessary, stand up to the President and clearly articulate what these perceived or real risks are. Heavyweights like Anglo should be leading these debates.

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