Dubious monopoly capital or legitimate entrepreneurial spirit? Is the Oppenheimer family’s latest venture no different to the Guptas’ corrupt practices?
The Oppenheimer family’s Fireblade Aviation has taken the Minister of Home Affairs, Malusi Gigaba, to court over his refusal to grant it a licence to handle international travellers through its operations. While the case still has to be heard, the family has been on the receiving end of a lot of flak – much of it written in ignorance of the facts. (Disclosure: I previously worked for De Beers Group)
One perspective of the family’s battle is a view, expressed by several journalists, that Fireblade is of dubious standing because it represents elites entrenching their asymmetric influence over a society. In this sense the suggestion put forward is that it is illegal – seeking, as it does, Gupta-like, to compromise national security and border control by wresting this vital function away from government. Here, the assumption underlying everything is that the licences sought come with associated customs and immigration rights, outside of Home Affairs jurisdiction.
Any reading of the affidavits before the courts should easily disavow doubters. The licences sought are distinct from immigrations services, which will remain a key government function. Fireblade stands to make its money from refuelling fees. Every private carrier which lands there will pay a landing fee to ACSA, exactly as they would do when landing at OR Tambo International or Lanseria, and when they do land they will presumably also have to refuel. This Fireblade will provide at a margin. It is commonly known that ACSA, which owns the land Fireblade operates out of, has for some time been trying to alleviate congestion at OR Tambo by finding an alternate location, managed by private investors, for business aviation – which is why they are keen on the Oppenheimer proposal. But what Fireblade will not do is have any say in determining who to let in or out of the country, nor will it earn any money from customs duties. Those areas, as is the case throughout the world with private airfields, remain within the purview of homeland officials.
This separation of functions between private investors and government control is nothing new. In England, for example, thousands of flights are handled through the private Farnborough Airport where passengers then go through government immigration. In America that number probably rises to tens of thousands. Even in South Africa, we have the example of the privately owned Lanseria Airport, owned by international investors who offer the same services Fireblade seeks (I find it curious that the Lanseria example has not been brought up previously in this debate).
So claims that the family are seeking to set up some sort of illegal, parallel immigration process for their own benefit are clearly not correct.
But another perspective most recently expressed by Peter Bruce in the Sunday Times is that while not illegal, the effect sought by Fireblade is immoral – because, as Bruce puts it, “the optics of exclusivity” that surround its exclusive status are bad.
This is a thoughtful perspective. In such a desperately poor country as ours, with increasing levels of inequality, any argument about elitism is certainly a reasonable one. But it should be appropriately directed.
In response to Bruce, I have a third perspective; one arguably less cynical and based practically on what happens in free markets around the world. This view holds that such investments, far from being nefarious, are actually legitimate entrepreneurial gambles which are routinely – and legitimately – done.
Under this perspective the way to assess Fireblade’s application, or any applications for private channelling of small aircraft, would be to view it through the same lens as the granting of a private hospital licence to a group of investors (say Netcare) – or, indeed, to many other forms of private intervention in government services, such as in the hugely beneficial private education sector (for example, by Curro Schools).
In the private healthcare example, the investors in Netcare would have spotted a market demand for quality healthcare which government does not provide and which the investors could exploit for commercial gain. All three examples require strict adherence to government oversight and control of key functions for a licence to be granted. In aviation, this relates, as we have seen, to immigration and customs. In healthcare, this relates to minimum health standards and operations. In education, this relates to curriculum.
All three examples require large upfront investment – and hence huge risk. And if one had to take this further, it is precisely this acceptance in society of private investors – investors willing to take a risk that they can offer better services than government, so that society benefits – that drives the push for opening up independent power generation in competition to Eskom.
Why does our society not begrudge elitism created by private hospitals and private schools set up in competition to the state, but view private, upscale landing areas dimly? The accessibility between the three differs widely, of course – upwards of 20% of hospital visits in SA are done privately, while I’d be surprised if the number of people travelling in private jets ever reached 1% – but the principle remains the same. While this might require an uncomfortable admission by some, if our society currently does not begrudge investment into areas of inefficient government services, then the same argument should surely also apply to the Oppenheimer investment in Fireblade.
Of course, as Bruce would argue, this is not the whole picture. He would point out that Fireblade also stands to make money from adjunct hospitality – the hope being that the rich would be willing, away from the chattering classes, to spend their dosh on the high-class cuisine and beautifully appointed suites rather than on the dreary fare on offer at the ORT food court and the linked Intercontinental Hotel. This is why he labels “the optics of exclusivity” to be in poor taste. Egalitarianism is a noble idea but I’m not sure if Bruce actually believes in this argument – if he did, then it would mean an admission on his part that Michelin-starred restaurants or five-star hotels have no place in our society.
Ultimately, away from the emotion of it all, the Oppenheimers’ interest in developing Fireblade is less for nefarious control or to undermine national security, and rather more because, as capitalists, they’ve spotted a market gap and intend exploiting that for commercial gain.
This is what entrepreneurs do. Operator licences for such aviation endeavours are often granted to qualifying investors, and the reason for the family’s court case is to argue that they have been unreasonably denied one for no rational reason other than that they refused to give a “backhander” to the rapacious, rent-seeking Guptas. If the Oppenheimers win their case and subsequently do well out of their investment, they would help increase the number of high-end tourists entering the country, which would raise tourism revenue and create skilled jobs. If they fail, they will personally lose all the money they have ploughed into the venture and that will be that.
Having been to the facility and seen the hundreds of millions of rand invested in physical infrastructure and the scores of skilled technicians trained, I can say this: The starkness to the Guptas, who have created nothing, trained no one and used society’s money illicitly to line their own pockets, is clear – depending on which perspective one chooses to view the debate through.
Ultimately, though, as it increasingly is in our country, it will be up to the courts to decide. DM
Kalim Rajab is a director of the New National Assurance Company, SA's largest empowered insurance company. He previously worked in the diamond industry, and was educated at UCT and Oxford. He writes in his personal capacity about SA, current events, film appreciation and culture. Catch him on twitter at @kalimrajab