HEAD
TO
HEAD
Published by Dolman Scott Ltd
Copyright ©Oliver Hill 2014
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without prior written permission of the copyright owner. Nor can it be circulated in any form of binding or cover other than that in which it is published and without similar condition including this condition being imposed on a subsequent purchaser
ISBN 978-1-909204-45-4
Dolman Scott
www.dolmanscott.co.uk
This book is dedicated to my wife Dominique, without whose unstinting support and dedication none of which is chronicled could have been achieved. My feelings are best expressed in the words of Shakespeare:
When in disgrace with fortune and men’s eyes,
I all alone beweep my outcast state,
And trouble deaf heaven with my bootless cries,
And look upon myself, and curse my fate,
Wishing me like to one more rich in hope,
Featured like him, like him with friends possest,
Desiring this man’s art, and that man’s scope,
With what I most enjoy contented least;
Yet in those thoughts myself almost despising,
Happily I think on thee: and then my state.
Like to the Lark at break of day arising
From sullen earth, sings at Heaven’s gate;
For thy sweet love rememb’red such wealth brings,
That when I scorn to change my state with kings.
DEDICATION
PREFACE
NOR IRON BARS
REBEL WITH A CAUSE
THE EARLY YEARS
RHODESIA
RHODESIA – THE STRUGGLE BEGINS
THE ELEPHANT FEAST
SLEEPING WITH THE ENEMY
EXIT AMERICANS
SABLE COMPLETION
TA – TOBACCO AUCTIONS
TOYS R US
PERTAMINA
LONDON
PERTAMINA PART II
FINANCE
THE RESERVE BANK
DIVERTISSEMENTS
SWAZILAND – THE PAPER TIGER
SWAZILAND – THE REAL FIGHT BEGINS
IN WITH A BANG
MORE BANG
TOVEX
PHASE II
STRATALOC AND KEVLAR
INTO THE BLEACH
LLOYDS
REVOLUTION
FINANCE WEEK
RIDING HIGH
FARMER HILL
In Johannesburg, South Africa, on 24th July 1939, Robert Oliver Hill was born.
No-one realised at that time that a few decades later this boy, now a man, would revolutionise the way business was done in South Africa and its neighbouring countries.
This book is a “must read” for entrepreneurs all over the world. It teaches and inspires how one can succeed even against the most formidable opposition. A real-life story told candidly and truthfully.
Likewise, it should be a “must read” for those in the business world who become complacent in their existing positions of power.
It was a pleasant, educational, and humbling experience for me to have had the honour of associating with Oliver, who possessed such unusual talent. He could converse with a miner in the deepest shaft, or with the Chairman of the Board of the largest companies in the world. He could quickly comprehend the aspects of complex technology, was a wizard at developing financial strategies, demonstrated outstanding marketing skills, and was a genius at discovering the weakest part of his competitor’s armour.
I hope you will find this book helpful and inspirational in your endeavours.
Robert Oliver Hill will always be in my fondest memories.
Ward N. Kissel, Jr
Licensing Manager (retired)
E. I. Du Pont de Nemours, Wilmington, Delaware
Clunk. The cell door of Brixton prison slammed shut. At long last the South African Reserve Bank had got me where they wanted me. And they would stop at nothing to haul me back to South Africa for a kangaroo court hearing. As a senior official said to one of my lawyers, “We know he’s guilty. Whatever evidence we have to produce to convict him, we will.”
Dominique outside Brixton
As Philip Clarke (the managing director of our fertiliser company and of Triomf Fertilisers) said to me: “You are obsessed with legality. I can tell you that you have driven a cart and horses through their precious system, and, regardless of the legalities, the South African Reserve Bank is going to cut your legs off at the knees. They will do whatever it takes to do that.”
What aggravated the Reserve Bank even more was that my legal team had butchered them in the Supreme Court and they had been ordered to return my family’s assets. When they appealed the judgement, the Appeal Court had ruled that they had no right ab initio to seize them. This, of course, opened the door to a massive damages claim and made them even more determined to nail me. When they knew that I was to go to America for an arbitration hearing, they initiated an extradition request to the USA, with whom they had an extradition agreement. I got to hear about it and left the USA; but, as there was an arrest warrant outstanding, I asked my US lawyer to investigate. He got a copy of the indictment supposedly issued in May 1993. The only indictment for which we had a copy was issued for Exchange Control breaches before May 1993. This later indictment made no mention of Exchange Control, which, of course, does not amount to a crime in any of the civilised countries of the world. The affidavit, issued by the Clerk of the Court, accompanying the indictment had very peculiar wording. So I asked Oshy Tugendhaft, my lawyer, to investigate the court record in Johannesburg. At first the Clerk denied that there was such an indictment, but inspection of his record book found that an indictment was entered on 31st December 1993, but supposedly dated May. Clearly a back-dated indictment had been issued, but, because of the consecutive numbering system and the chronological sequence, it was not possible to insert an indictment with the date of May to satisfy US legal requirements.
For the USA it was a requirement that the indictment be issued within 5 years of the supposed crime as there was a statute of limitations. Clearly, the indictment issued to the American authorities had been back-dated and the records in South Africa falsified in order to comply with US law. Presented with this evidence, the US authorities vacated the arrest warrant and I travelled freely to the USA.
Once South Africa re-entered the Commonwealth, the Reserve Bank made a further effort, as South Africa was now party to the Commonwealth Extradition arrangements. This allowed them to have an arrest warrant issued by the British authorities, and they then had three months to bring their case before the magistrate. In the meantime you cooled your heels in prison. To be incarcerated in a Victorian prison (Brixton), with all that entailed, was a stressful experience. Such was the sense of humour of the system that, as a white South African, it was considered appropriate to house me with a black African from Nigeria. Eventually it backfired, as from being very hostile we became friends and I was instrumental in getting his case dismissed. Eventually, all the foreign blacks in Brixton took to consulting me, as none of them could afford a lawyer. I was then moved in with a 22-stone armed robber, Graham, who took to being my protector. When one of the British blacks decided that it was time to attack me, Graham leaned on him as he was standing against the balcony and crushed the breath out of him, muttering in his ear to lay off me or he might just fall off the balcony. He laid off me and I was not bothered thereafter.
Unfortunately, the policy of the British Government was not sympathetic to white South Africans.
I, of course, made an application for bail. To the horror of my lawyers, I was not allowed to attend the Court hearing and nor could I communicate with them, either in person or by phone, as I was only allowed two minutes on the phone. In spite of having top barrister Charlie Falconer (later Lord Falconer and Lord Chancellor under Labour), bail was denied.
The matter then went before the Magistrate. Under English Law it was necessary to prove someone had suffered actual prejudice. The only prejudice which could be asserted in reality was that a Government is entitled to have its laws obeyed. As the only crime which in reality could be asserted was that of Exchange Control violations (not a crime in England), a new prejudice had to be found. This was found by the SA Government asserting a loss of R130 million to the South African Treasury. As Oshy, my lawyer, had come to England for the hearing as a witness, we were pretty confident that he would be able to shoot down this blatant lie. But at the behest of the barrister for South Africa, one Michael Birnbaum, I was prohibited from bringing any evidence at all to the court. So, of course, that accusation stood. Oshy would have been able to testify that it was all a pack of lies and that factually no-one had suffered any loss. Three years later, in another case, the House of Lords ruled that it was a basic right to bring evidence in one’s own defence and in the case in question, the plaintiff was set free immediately. So I had been unlawfully incarcerated in Brixton for three years.
But before this case came up we attacked the Attorney General in South Africa, and brought a case against him, demanding an indictment and asking the Court to declare the Reserve Bank powers to be unconstitutional. In Court he asserted his right to try me for whatever he wanted. But he had given assurances to the British Home Secretary that I would only be tried on the basis of the case before the English Courts. Even the supine courts in South Africa would have held him to that. So he agreed to withdraw from the case, provided I settled with the Reserve Bank. I made the settlement with the Reserve Bank, which would allow me to return to South Africa without fear of them then hounding me for Exchange Control.
Even though I had been obsessed with my legal rights and thought I would be able to fight them off, I was too tired to get into another long legal wrangle. The settlement was secret at the behest of the Minister of Finance. One of the conditions was that all members of my family and all companies associated with me had to agree not to make any claim for damages against the SA Government, the Department of Finance and the Reserve Bank, and that the agreement with the Treasury was to be kept secret. I assume, therefore, that I can be sued for this revelation. On the other hand, Mark Shuttleworth has proved that many of the Reserve Bank powers used against me are totally unconstitutional. I had brought a case against the Attorney General asserting that many of these powers were both ultra vires and unconstitutional. In the Shuttleworth case this was, in fact, what the Constitutional Court had ruled. No wonder the Attorney General forced me into a settlement with the Reserve Bank; they faced a monumental claim for damages!
Sitting in that miserable hellhole of Brixton, I could contemplate the incredible duplicity of the SA Government and the Reserve Bank. I also thought back to a dark and stormy night in South Africa when I was called out to hear that there had been an explosion at our Bronkhorstspruit explosives plant. I rushed out there to find there had been an explosion and five staff members were missing. We collected some of their remains in fertiliser sacks. The explosives mix house had been destroyed. At midnight I sat down with Phil Smart (the factory manager) and his deputy, Ray Gibbison, to hold a conference. Everyone was distraught. It was one of the most traumatic experiences of my life. I was asked: “What next?”
I said: “Tomorrow morning we will bury our dead. In the afternoon we will start with a new mix house and you guys have three weeks to complete it.” They did.
I then got a letter from the wife of Johan van Aswegen, our dead production manager. His funeral had been traumatic. Her letter was a profound shock. She said she was not bitter about Johan’s death, because he had died as a very happy man pursuing “Oliver Hill’s Dream”. She was thankful for the many happy years he had spent with my team.
People like this are worth their weight in diamonds – as was underlined when Sasol bought the explosives company, and told me that they would only keep the top management for a month or two as they wanted to install the “SASOL way”. In fact, they took my two top men over to run the whole explosives business! No greater compliment could have been paid; my team were amongst the most motivated and capable people one could find.
We found incontrovertible evidence of the sabotage of the plant and evidence as to who had been responsible. This was all produced at the inquiry. The people we had lost had been murdered.
It was an open secret that those stalwarts of human rights, Generals Pinochet and Franco, were the two bastions of South Africa’s arms supplies. The evidence pointed directly to Spain. However, it was not politically convenient to follow this line of inquiry and the matter was never pursued.
It is true that I turned the South African chemical industry upside down, but this was by introducing new products and processes which rendered many of the plants obsolete. This upset the cosy, but powerful, cartel.
On the other hand, we didn’t commit murder.
After twenty turbulent years in business in what have to be some of the most momentous years in the history of my country, and after having been tried and condemned by the press as a criminal, I feel that it is time to place on record my side of the story. It is one of the great ironies that the days of the white man making history in Africa are rapidly drawing to a close, and the vicarious pleasure which the petty officials of the Afrikaner Establishment have derived from vilifying me are as nothing in the grand sweep of history.
Nevertheless, the impact of a small group of people has been profound, and it will compound the South African tragedy if the effects of the wild excesses of Afrikaner Nationalism are parodied by their successors in title, the African National Congress. The experiences I have undergone are a microcosm of the attitudes, mores and prejudices of my countrymen.
I am an Afrikaner. Although my name is English, the blood flowing in my veins is almost entirely of Afrikaner origin. Being English speaking with such a heritage makes me a traitor in the eyes of Afrikanerdom. The Afrikaners have throughout their history been rebellious against what they have seen as officious authority, except in the last century. In this century, the power of groupthink has forced a conformity upon Afrikanerdom, all too evident in their appointments to the Courts, to the increase of legislation by fiat, to the pressures to “be a good South African” which means a kind of slavish chauvinism, reinforced by the laager mentality into which we have been driven by a world which does not understand us. Anyone who lifted his voice against this mainstream of thought was branded a traitor to the volk.ast.
My Afrikaner forebears have had a long history of being rebels. My upbringing by a mother, Dora Kotze, who cherished the ideals of democracy and Liberalism all her life made me receptive to the ideas to which I have been exposed to in my education outside South Africa. My mother’s family, the Kotzes, throughout our long history in South Africa, have been vilified by the establishment for their strongly held views. When today one reads of the issues for which they were vilified, it hardly seems credible.
Both her grandfathers were dominees. The one, the Reverend D.P.Faure, decided to become a minister and went off to Leiden in Holland to study theology. On his return to Cape Town he was invited to preach in the Groote Kerk. His sermon, although one carefully calculated to be mild, was greeted in stunned silence by the congregation. No-one came to the vestry after the sermon, so in the end, to save them the embarrassment of having to go home without their coats and hats, he left quietly. A violent campaign was waged against him by the Moderator of the Dutch Reformed Church, the Reverend Andrew Murray, who preached a sermon on the basis of Chapter 13 of Deuteronomy, calling for Faure to be put to death by stoning. It seems a harsh punishment for a man who held the heretical views that it was possible to believe in Charles Darwin’s recently published Origin of the Species and God at the same time! And was not afraid to say so! The upshot was that he was forced by his followers to found the Free Protestant Church in Cape Town as the Dutch Reformed Church closed its ranks in horror against his heresies.
The other grandfather, the Reverend J.J. Kotze was one of the leaders of the liberal movement in the Dutch Reformed Church, together with the Reverend Thomas Francois Burgers (later to become President of the Orange River Republic) For denying the existence of a personal devil, and the sinlessness of Christ, he and Burgers were suspended by the Church Synod. Although they sued and won in the Supreme Court and were reinstated, the vituperative campaign against them never ceased. In these days we laugh at the death sentence passed upon Salman Rushdie by the Ayatollah Khomenei, but in our own history we have little to be proud of. Whilst our nation has always produced independent thinkers, the Establishment has tended to react with extreme violence towards them.
The brother of the Reverend Kotze was the famous Chief Justice (later Sir John Kotze) of the Transvaal Republic. As one of the country’s most highly regarded jurists in Roman-Dutch law he had a difficult row to hoe. The President of the Republic, the redoubtable Paul Kruger, knew what he wanted. He was usually able to force his views through a compliant Volksraad, and was one of the earlier dictators of our society.
Sir John had earlier taken the view that the Volksraad was sovereign, and could do as it pleased. Accordingly he took the view that the Courts had no power to test the laws of the Volksraad against the Grondwet (the Constitution). However, after many years on the bench, and having been profoundly influenced by the American Constitution, he came to the view that the High Court existed as, inter alia, the Guardian of the rights of citizens against the arbitrary exercise of power by the Volksraad. Accordingly, when a fairly insignificant case came up, he changed his earlier view, and declared that the law passed by the Volksraad was in conflict with the Grondwet, and gave judgement accordingly. One of his fellow judges ducked the issue by deciding that the Volksraad could not have intended to make the legislation retrospective (something from which our current rulers do not shrink!) But Sir John came out fairly and squarely on the main issue. And he took the position that the independence of the judiciary was one of the hallmarks of a civilised state, and that that this independence served as the citizen’s bulwark against a state which was only too anxious to arbitrarily deprive citizens of their rights.
Kotze was a lone voice in the wilderness. Kruger reacted with ferocity and demanded that the judges all sign an oath relinquishing any pretension to the “testing right”, which he described as an “abomination”. All the judges except Sir John eventually complied and thus became lackeys of the State. Kruger thereupon summarily fired Sir John, an act which again was remarkable for its complete lawlessness and the supine reaction of the populace, who in any event had their eyes upon the much more momentous events unfolding as the Boer War loomed.
In the end, Sir John had the last laugh as he ended his days as a much loved and respected judge of the Appeal Court of the Union.
But the leopard has not changed his spots. The totalitarian tendencies present in my Afrikaner brethren are all still there. It is their accepted norm to pass retroactive legislation, and to empower Ministers to make regulations which effectively remove the law making function from Parliament and place it in the hands of bureaucrats. These bureaucrats are then also vested with a quasi-judicial function. Even the rubber stamp for the Nationalists that Parliament was for 40 years is an embarrassment. The attitude is that cabinet ministers are somehow endowed with all-seeing, all-knowing powers; they do not need the inconvenience of courts to scrutinize them, they never make mistakes ! (This was asserted to my lawyers by Dr Lombard, the then Deputy Governor of the Reserve Bank).
My grandfather, Sir Robert Kotze, was one of South Africa’s greatest unsung technocrats. With his far-sighted vision of the mining industry, he installed a tax system, which has remained unchanged in principle for nearly a hundred years. He took the then unfashionable view that the riches of the earth belonged to all the people, subject to a proper system of incentives for private enterprise to seek, find and recover those riches. Long before environmentalists became fashionable in the rest of the world, he set about creating environmental laws in the mining industry, as well as safety laws, which even to this day are a model. He was responsible for the creation of Eskom, which he modelled on the Tennessee Valley Authority.
He ran foul of a minister who decided that it was his prerogative to appoint the staff of the Department of Mines. As the minister had decided to appoint an unqualified person as an Inspector of Mines, against my grandfather’s advice, Kotze resigned. He thereupon was invited to stand for Parliament by Smuts where he served with distinction for a decade. He also was invited by Ernest Oppenheimer onto the boards of De Beers and AE & CI, quite an irony in view of my latter history.
And the even greater irony is that he was invited to join those boards to bring some respectability to as ruthless a bunch of robber barons ever to grace the South African business scene!
So my family became very Establishment over time.
The peculiar thing about the South African business structure, which was heavily weighted by its gold mining and diamond mining background, is that these activities needed no marketing. Gold was sold at a fixed price to the Americans, and diamonds were sold through a cartel. The normal disciplines of a capitalist society, in which the market is the all driving force, were almost entirely lacking. The people who rose to the top in the system were just politicians, who knew how to climb up through the bureaucracies which inevitably developed. And as the mining houses got control of the industrial base of the country, they followed the same philosophy of rigged markets, because they simply didn’t understand what a market based capitalist system was about.
This cosy world looked down upon the people who actually sold goods for a living. It was somehow not quite acceptable to be associated with people “in trade”. The highest social class was made up of people who sold gold for a living because there was no competition - definitely a job for gentlemen! It was anticipated that I would do the normal thing expected as a scion of such a system; go to the best private school in the country, get a decent degree at a South African university, finished off by a post graduate degree at Oxford or Cambridge. The final step would be to join a mining house, and march up the ladder within the establishment, and never, but never, rock the boat, or question the system.
Well, my mother was something of a maverick and she and my father decided that perhaps I was not entirely cut out to be a conformist member of that little world.
I went to Wits where among other subjects I had the rare privilege of majoring in applied mathematics. This little class had daily exposure to Arthur Bleksley. Bleksley was an inspiring person, and although regarded with awe by all his students he was a very approachable man and never belittled students. I went to him with a zany idea which, if it worked, would enable one to overcome the second law of thermodynamics.
I explained that I wanted to use a funnel to capture gas molecules and allow them to accumulate in a vessel which would then become pressurised. The gas could them be let out to generate power and would drop in temperature. Bleksley listened and said to me, “Well if I were catching tennis balls I know which end of the funnel I would use. But both of us know that you can’t overcome the second law of thermodynamics. Let’s work it out.”
The simple answer in the end is that for every molecular path you can postulate from the funnel end you can postulate for the tight end so that equal numbers of molecules have to go through from each end and it has nothing to do with the geometry of the collector. But I wasn’t ridiculed, which is one of the reasons students loved this inspiring man.
After getting a first class honours degree on chemistry at Wits, my family came to the conclusion that I was, horror of horrors, a commercially orientated individual, with an extremely rebellious attitude towards authority, and that perhaps the American way of looking at life was a more appropriate for me. I was therefore persuaded by my father that perhaps I should look at trying for the Harvard Business School instead of Oxbridge or the London School of Economics. I thought this was a great idea and decided that I was going to Harvard !
Utilizing the last leverage of being in the Establishment, Charlie Engelhard, the Platinum King, gave me a job in America at his company in New Jersey, and there I duly arrived in the spring of 1962. I worked in the research and development division of Engelhard Industries whilst waiting to see whether I had been accepted at Harvard. We had sailed for America under the assumption that I would be accepted. Part of it was arrogance, part was just the assumption that failure to be accepted was not possible. I had written a test called the GMAT, which was used as one of the factors determining your acceptance or otherwise. In this test, which had no upper limit score, I got a score of 49. The upper 10% score was greater than 39. The upper 1% was greater than 42. So I assumed that I had to have a score somewhere near number one out of the ten thousand who wrote that year, and therefore that I would be accepted.
Well I was, so off to Harvard we went.
Having gone to America to work for Charlie Engelhard, the legendary boss of Engelhard Industries, before hopefully being accepted at Harvard, I started in the Research and Development Department. My boss was a Doctor Straschil, an Austrian who had walked back to Austria from Stalingrad and then emigrated to the USA. I had to pass his little test on thermodynamics before I was allowed to work in the gas labs. We were there concerned with the catalytic treatment of gas streams for pollution control and for catalysis of gas reactions.
The big deal was the idea that, with new California legislation to control exhaust gases from cars, there would be massive demand for platinum and the race was on to develop catalytic converters. For this, unlimited funds were made available. I learnt a great deal about the business.
Finally, I was advised that Harvard had accepted me. My wife Dominique and I had to prepare to move there.
For young impressionable students to go to Harvard in 1962 was like being hit by the revelation of St Paul on the road to Damascus. Kennedy was president and his vigour and vision had a dazzling impact on us. One of my colleagues at Engelhard later explained it as follows: First, he said, Kennedy “had class”. Secondly, one must understand the difference between Roosevelt, Johnson and Kennedy.
The Kennedy vision of America and everything he stood for made America and what the Americans stood for an exciting vision of the future world order. We went through the Cuban missile crisis sitting in our car in the snow listening to Kennedy and wondering whether we should drive off to our friends’ cottage in Vermont. Boston, with its electronics industries, would clearly be a prime target for a Russian hydrogen bomb.
The adroit handling of this and many other revelations showed us democracy at work. And, of course, we were in the cradle of the Kennedy administration at Harvard. One of our professors at the Business School told us proudly that the school now had more than 50% Republicans, as “all the lousy Democrats have gone to Camelot!”
When we were there it was said to us that we would never again sit in the same room as 95 other persons with as much brain and ability as those present. They pointed out that for the 670 places on offer there were 20,000 applicants. That the process of selection meant that prospective employers who used to recruit at Harvard every year from the graduating class knew that Harvard had already selected from the brightest and best in the business world, that salaries were at least double what you might expect elsewhere and that this, of course, fuelled the desire to become a Harvard graduate.
I have to mention that the case method of instruction means that no-one is lecturing you. There are no right and wrong answers. After studying and discussing a thousand cases over the two years, you develop your own business philosophy. And you have the continuous input from a lot of hyper-intelligent people who really make you think! Your work week is at least 70 hours. Only at exam times can you relax, because there is nothing for which to swot!
So, apart from the dazzling feel of being young, in America, in the Kennedy administration, input from Harvard stimulated me in a way in which I have never ever since been exposed. In the words of Wordsworth: “ Bliss was it in that dawn to be alive. To be young was very heaven.”
And working at Engelhard Industries during the summer at American Platinum and Silver Works, I gained a great insight into the workings of large-scale dealing with precious metals as a newly half-qualified industrial engineer putting into practice all the lessons learned by wading through all the production cases at Harvard.
I finally graduated with four distinctions.
After graduation, I spent a year in the marketing department of Engelhard Industries. One of the more interesting things we did was marketing ferrochrome. Back in South Africa, my father had been instrumental in supporting Micky Bleloch to make low-carbon ferrochrome from Transvaal ore. Rand Mines built the first plant out at Middelburg to produce the stuff. Because of the low chrome/ iron ratio, their product had only 55% chrome compared to the more normal 67% from Rhodesian ore. We tried convincing the steel companies that they were getting all that beautiful low-carbon iron for free! Even in America that took some selling. Today, of course, South Africa dominates the world in ferrochromium and all from Transvaal ore. But it was tough to get there initially.
South Africans generally are very risk averse. I was asked to do a marketing study for Rand Mines on the market in the United States for acid-grade fluorspar, as they were contemplating buying a mine and producing 60,000 tons a year. I enthusiastically set about it. The Engineering and Mining Journal provided me with all the data required and I discovered that basically three companies were responsible for 80% of consumption – Essex Chemical, Du Pont and Allied Chemical. I quickly arranged appointments with all three and got a commitment from each for 20,000 tons per year at the E&MJ-posted price – 60,000 tons sold, and having done the whole thing in ten days I was pretty chuffed with myself and sent off a report.
The reply from Rand Mines in South Africa was that as they had to risk the money they expected at least a three-month investigation and couldn’t believe anything done so quickly could be for real. I explained that currently the buyers were in the hands of Mexico and Italy (not very reliable suppliers) and that they were more than happy to place a quarter to a third of their business with another supplier. Bang went one fluorspar mine. It shows the mindset of the big mining houses at the time.
Being close to Charlie Engelhard and an Oxford friend of my father’s, Herbert (Woody) Woodman, who was president of a large chemical company, we were privileged to enjoy some of the fleshpots. Charlie had a four-bedroom flat in the Waldorf Towers, filled with Monets, Renoirs and Cezannes, at which we were able to marvel, as well as Woody’s flat on Park Avenue, so we spent many happy weekends in New York. Then Charlie asked us to do a favour for the erstwhile owner of Interwoven Socks and Fleischman liquors. John Mettler was a very down-to-earth guy who spent his summer farming in British Columbia, and wanted someone to look after his estate in New Jersey. So we had two happy summers in North Branch, New Jersey, in a fabulous house.
When the Woodies visited, Jean Woodman gasped. She said to us: “Do you realise you are living in a museum of George Washingtoniana!” At least five hundred items in the house either belonged to him or were associated with him. Jean said that the house was a treasure trove worth many millions of dollars – all collected by John Mettler’s father, the sock baron of America. The Mettler estate was only a mile from a funny little railroad which ran a commuter service to Newark, where I worked, so it was easy to get to work every day.
All good things come to an end, however, and it was time to come home. Dominique and I had got married and gone to America with four suitcases, but we now had three shipping tons. We also had a daughter born in America and very little money to get home. To finish off at Harvard I had borrowed a couple of thousand dollars from Engelhard. So I owed that as well.
I had been corresponding with a family acquaintance, John Hahn, about what I might do when, and if, I returned to SA. John was a great entrepreneur who had an engineering company and had started in the electrolytic manganese business from uranium plant effluents. He then entered the ferrochrome business using Rhodesian ore. He was in partnership with General Mining and was chafing under the dead hand of bureaucracy. He suggested that we start a company. He would give me a salary of R200 per month and a car and initially 40% of the company with an option for R10 for another 10% after five years. To live on that with a now pregnant wife and a daughter didn’t exactly look like a hell of a deal. But my father agreed to finance our home, which was in Johannesburg’s Vivian Estate and where gum trees blocked his view, on condition he could cut down the gum trees. So for R14,000 we were the happy owners of the forester’s cottage on the Sachsenwald Estate, now Forest Town and Saxonwold. Incidentally, the two empty stands on the estate sold for R14,500 each, so our house was considered to be worth – R500.
To return home I had been pulling some strings, as we got to know Anitajean Galantucci, Charlie Engelhard’s secretary, rather well. He was planning to go to South Africa in his plane – the Platinum Plover. This was a 60-seat turboprop Convair converted for 20 passengers. Very comfortable, and in those days one of the few private airliners around. Anyway, Charlie had just bought into a company in South Africa and he wanted to install one of his own people to “strengthen the management”. He asked what I wanted and I said R10,000 a year plus perks. No problem. It was an American salary.
The bosses of RMB Alloys also wanted me at a good local mining house on a salary of R150/month. So did Syfrets, the investment and banking house, at the same magnificent salary. So John’s R200 was not out of line with SA salaries, actually.
Anyway, with a free ride for myself, wife, daughter and three tons of luggage, I agreed to meet with the boss of the company Charlie had acquired. Well, his attitude was that he did not have anything for me to do and it was clear that I was viewed as Charlie’s spy planted on him. So I told him that I certainly didn’t want a job with nothing to do and I was just seeing him at the request of Mr Engelhard. If there was nothing to do, I would cheerfully duck on it. At once he became warm and friendly and we parted the best of friends. But the shit hit the fan in Engelhard Industries. Charlie was mightily upset.
So I took up with John Hahn and National Process Industries was born in May of 1966.
Being hot off the press, so to speak, in the platinum business, the project with which I first became concerned was in Rustenburg, northwest of Johannesburg. John had negotiated a chrome deal with Edward Molotlegi, who was chief of the Bafokeng tribe. The tribe owned some 17,000 hectares of land at Rustenburg. Edward had agreed with John that he could negotiate for the platinum rights. So I was out to Rustenburg twice a week for some months. I worked out a deal with Chief Edward. He would get a down payment of R6,000, which would enable the tribe to buy a tractor and plough, and would enjoy a royalty of 12.5% of profits from mining, refining and marketing.
I had put this in as I had insight to the deal Charlie had done with Rand Mines. What he had charged them for refining and marketing was obscene and the company had made a staggering amount of money out of them when I was in America. I did not want to chisel the tribe, and thought that 12.5 % was fair (later, we discovered that the going rate from the mining houses was 2.9%). Anyway, we worked out a very nice deal and it was necessary to go out and raise money. From my time in America I knew that Union Carbide, who were John’s partners in ferrochrome, used some 400,000 ounces a year of palladium. So it was logical to talk to the Union Carbide metals division and the boss thereof duly arrived in South Africa.
I took him out to Rustenburg and showed him the set-up .We even walked down an old incline shaft sunk in 1929. I showed him the Merensky reef, the main platinum-bearing horizon, and told him that there was a resource of probably 150 million ounces of platinum, 60 million ounces of palladium, 14 million ounces of rhodium and a million tons of nickel. The value was many billions of dollars.
He asked me: “How is it conceivable that this could be available for R6,000 down and 12.5% of profits? Why hadn’t one of the great mining houses snapped it up? There must be a catch.”
I explained to him that the conventional wisdom in South Africa was that if you didn’t have a deal with Johnson Matthey or Engelhard, you couldn’t sell your platinum. You had to have a marketing deal. His response was that that was crap. Union Carbide bought hundreds of thousands of ounces of palladium from Russia every year and the Russians sold all the platinum they wanted to into the market. My proposition was absurd and there had to be a very deep-seated catch to the whole thing. So Union Carbide turned it down. The rest is, of course, history. Two Johannesburg stockbrokers – Anderson and Wilson – picked up my contract, paid the R6,000, and Impala Platinum was born.
Syd Newman, then in charge of Rand Mines, told me much later how Anderson and Wilson had hawked the project all over town without any takers. When they came back to Syd (who was constrained by his Engelhard/Anglo deal), he advised them to go to Union Corp and put in a good word for them. Many multi-millionaires were created as a result.
Some time later, when my father was a consultant to President Mangope of Bophututswana, he came to me with a problem. The Bophututswana Government was deriving very little revenue from Impala Plats. He asked me to look at the books and I discovered that what General Mining (the new owners of Union Corp) were doing was to apportion the profits between the refinery in Springs (in South Africa) and the mine in Bophututswana. They did this on the basis of the capital employed in each place. However, the capital in the mine was written off as a wasting asset, and the refinery was written up each year to its replacement value. That meant that the lion’s share of the profit was taxed in South Africa at an industrial rate, whilst at the mine it was taxed at the precious metals rate (much, much higher). In addition, the tribe no longer got a share of the refining profit.
I said to my father: “Why, General Mining is swindling the tribe and the Bophututswana Government of the profit share that they are entitled to.” My father, being of the old school, was shocked and said that General Mining would never stoop to stealing from the tribe who were entitled to their profit share and tax. But, in fact, General Mining waltzed off with hundreds of millions by this means. Having worked in the share valuation department at Rand Mines and been exposed to the way taxes were manipulated to pay as little as possible, I took that comment with a sack of salt.
We then turned our attention to other platinum projects in the area. One of the tribes we talked to was the Bapo Bo Mogale tribe, represented by their chief, Fred Mogale. Fred fell for our offer hook, line and sinker. After the obligatory meetings with the Tribal Council and much haggling, they accepted. The signing was set for the next week. As we parted, Fred said to me that they had another contract but it was not serious and meant nothing. I said I’d better take a look at it anyway.
Well, it was our old friend Tiny Rowland, the Lonrho mogul. The Lonrho contract was the most one-sided I had ever seen. No minimums, no programme and an everlasting right in favour of Lonrho. I regretfully told Fred that he was tied up hands and feet forever and had no out. Tiny could sit on those rights for 50 years and he could do nothing about it. And all that for a miserable 2.9%! Now, of course, it’s Western Platinum/Lonmin.
The final throw we had was with George Abdinor, who was involved with Rowland in mines in Rhodesia. George wanted to get into platinum. There was a farm which, while under the Bafokeng, was Native Trust land and not owned by the tribe. It therefore fell under the Minister for Native Affairs. On approach, he in turn passed the buck to the Department of Mines for a recommendation. Their recommendation was unequivocal. It should go to us.
But by then Union Corp was in full swing with the Bafokeng. One of their directors was a certain Dr Holloway, one of the top Broeders (the secret Afrikaaner business “club”) in the country. The minister got the message loud and clear. It goes to Union Corp.
So that was the end of our foray into platinum.
Time to go fishing! Incidentally, with Syd Newman. September 1966.
Rhodesia is where it all began. I had returned from the USA with one aim really, and that was to catch a marlin at Bazaruto Island off the coast of Mozambique. September 1966 therefore found me on nearby Paradise Island with a boat chartered for two weeks, with this objective in mind.
The season had started early, fortunately, as usually the marlin came at the end of September, whilst the sailfish arrived at the end of August. In those days, although the management and administration of the hotel was unbelievably bad, the atmosphere was magic. With a dozen boats plying the waters, seeking marlin and other denizens of those warm waters, the evenings in the pub were full of fun and camaraderie, and we did no little damage to the green wines of Portugal, which flowed copiously all night. Two characters from Rhodesia, Lofty and Cecil, farmers from Umtali, were particular favourites of ours, and we spent happy hours solving the problems of Africa, and talking about the day’s fishing, the fury and cunning of marlin and any other subject on earth.
The common wisdom was that one in three marlin that struck were hooked, and one in three marlin that were hooked were landed. The sight of these huge fish all lit up in silver and purple, slashing away at the baits and teasers, and, if hooked, tailwalking away at high speed, was pretty adrenaline pumping. Anyway, after an hour-long fight, I landed my first marlin, a small striped specimen of 250lbs.
It was during one of those evenings that I started talking about the fertiliser ring, and how I had an idea to make fertiliser more cheaply. I had come back to South Africa believing that the South African fertiliser ring was engaged in ripping off the farmers in any way that it could. This was, of course, music to any farmer’s ears and Lofty told me that the Rhodesian Government was asking for proposals to establish a fertiliser factory, and that he thought that the deadline was at the end of the month in Salisbury.
Having caught my marlin, I returned to Johannesburg and told John about it. We went to see Mr John Gaunt, the Rhodesian representative in Johannesburg, who confirmed that there was indeed a tender out for proposals to manufacture fertiliser in Rhodesia. However, the closing date was at the end of the month.
Gaunt arranged a meeting for us with the Minister, George Rudland, for the next day, and we flew off to Rhodesia. It was immediately apparent that there was to be only one proposal, and that was by the cartel who had the market sewn up in Rhodesia: AE and CI and Fisons. Rudland agreed that he would extend the date by one month, and we could submit a proposal, if we could do so, by the end of September.
I actually knew virtually nothing about the manufacture of nitrogenous fertiliser. Like all science students, I knew about Haber and Bosch, and that ammonia was made from hydrogen and nitrogen. Nitrogen was easy enough to get from the air. But hydrogen?
The Rhodesian Government had suggested two possible sources of hydrogen. The first was from naphtha from the new oil refinery at Umtali, and the second was from coke-oven gas at Risco, the iron and steel company. It was obvious that this was going to be a long haul, and because John Hahn was a member of the Rand Club, he took advantage of reciprocity with the Salisbury Club, where for the magnificent sum of £2 you could get bed and breakfast.
Having the advantage of knowing virtually nothing about ammonia manufacture, I approached the ammonia problem with no preconceived ideas – a great advantage. All I knew was the basic chemistry of ammonia, which required nitrogen and hydrogen. Everyone knows that the nitrogen comes out of the air. You must find a source of hydrogen. I knew that Sasol in South Africa made its hydrogen by the gasification of coal. I also knew that hydrogen was made for margarine factories by the electrolysis of water. So, apart from the sources suggested by the Rhodesian Government, here were two further possibilities. At the meeting, Rudland granted a month’s extension for proposals.
I went into the library at the Salisbury Club, and immersed myself in the books about Rhodesia, the local financial news, and in fact anything I could lay my hands on to learn about the structure of the country and its whole economic foundation. One of the very interesting factors which became immediately apparent was the rather advanced state of electrical power development. The Kariba Dam had been built to supply the needs of both Rhodesia and Zambia, and, in order to make it economic, a very high voltage distribution system, far in advance of anything in South Africa, had been built, linking the Kariba Dam from the Zaire system to as far south as Bulawayo. All the thermal power stations had been closed, and were just maintained for standby purposes, and there was a large surplus of water available which had to be spilled every year through the dam. This surplus power was essentially free. Further, it became apparent that the system, especially in Rhodesia, had a very high daily peak, and for most of the rest of the day it languished at a very low level. So the capacity was unused at these times, but, and this was the important part, the power corporation charged virtually nothing for the actual power used, only for the maximum demand established at any time during the whole year! As Rhodesia effectively paid for the “peak”, anyone who could use the valley was essentially entitled to its power for free.
The idea of free power seemed to me to be a promising avenue to follow as a possible source of hydrogen. Naphtha from the new Umtali refinery was another source being put forward. Naturally, the Umtali council was promoting it heavily. However, there was strong political pressure to have a wholly indigenous source of feedstock. It was believed, rightly as it turned out, that if Rhodesia declared UDI, the refinery would close, being unable to import crude oil, and bang would go the ammonia plant. So naphtha was discarded as a source at a very early date.
Brief investigations into coal gasification showed it to be relatively uneconomic on such a small scale. The two routes which seemed to me, therefore, to hold promise were coke-oven gas and water electrolysis.
The coke-oven gas in question came from Risco, the iron and steel company. This gas had a hydrogen component which could readily be extracted via a nitrogen wash process. There was sufficient to make 150 tons per day of ammonia. If more was needed, then both the carbon monoxide and the methane in the gas would have to have been brought into play, increasing the size and complexity of the plant immeasurably. So, if the economics of an electrolysis plant could be made favourable, this seemed to be the most promising route.