‘The unacceptable face of capitalism’: how history repeats itself from Lonrho to the Marikana Massacre

In the 1960s, The Lonrho group was memorably labelled by Prime Minister Edward Heath as representing the unacceptable face of Capitalism. Fifty years later, this week, a much re-structured organization was accused in the same terms by Sir Richard Needham, a board member in tendering his resignation

The original Lonrho [London and Rhodesian Mining and Land Company] was built into a conglomerate retaining its focus mainly in Africa by controversial entrepreneur Tiny Roland. His leadership style and practices gave him the reputation of a ruthless operator. Board room battles and attempts to oust him in 1973 resulted in the notorious outburst in Parliament by Edward Heath. Roland continued to be a high-profile and contentious figure as he expanded the influence of Lonhro, eventually being removed as Chairman in another board room coup, twenty years later.

He repeatedly attracted controversy in his business dealings including an obsessive pursuit of Harrods and the House of Fraser, and feud against the Fayads in the late 1970s.

A more serious set of allegations surrounded his deals with the Libyan government, at a time when the United Nations was considering sanctions in connection with the Lockerbie bombing. “To me, Gaddafi is a super friend,” Rowland explained. “Don’t talk to me about morality and proper behaviour. I pay my taxes here. Gaddafi and Lonrho are a perfect fit.”

After Roland’s departure, Lonrho went through various divestments and name changes. Controversy continued to stalk the emerging corporations. The mining division emerged as Lonmin plc, which earned unwelcome publicity and financial rating through the Marikana miners’ strike in 2012 in which 34 miners were killed.

In 2014, another controversy broke out in the corporate entity retaining the name of Lonrho.

When it comes to assets, a majority stake in a Mozambique hotel is all that links the sprawling, Africa-focussed Lonrho conglomerate which was built up by controversial businessman Tiny Rowland in the second half of the last century and the overhauled group today. Yesterday, that slender asset link was joined by a corporate governance connection, as the former trade minister Sir Richard Needham quit the board of Lonrho following a row about pay and transparency.

In his resignation letter, Sir Richard alluded to Lonrho’s one-time reputation under Mr Rowland:

“You will remember only too well that the allegations, years ago, that the company was dubbed an unacceptable face of capitalism, dogged its reputation. It would be a pity if history was to repeat itself,” Sir Richard wrote. [June 11th, 2014]

In essence, the corporate governance complaints against Mr Rowland’s old Lonrho and executive chairman David Lenigas’ new Lonrho – a vastly slimmed down operation largely dedicated to agribusiness – are quite different. Sir Richard’s concerns about the new Lonrho centre on the proposed hike in the salary of Mr Lenigas, from £500,000 to £750,000 – and the way he allegedly rushed it through.

Lessons of history?

Mining has always been a tough industry often operating in extreme environmental conditions. Pioneering leaders have to deal with the other powerful leaders seeking the best deals for their institutions and their personal interests. The protagonists often share combative instincts. Roland, for example worked with the notoriously unpredictable Colonel Gadhafi . He also had no apparent qualms about engaging in bitter personal battles with the Fayads, and former allies with whom he had fallen out.

His successors at Lonmin are embroiled in investigations of the deaths of 34 of its mine workers in Marikana. In the ‘new’ Lonrho, the disputes and resignations continue. The company is said to be risking resurrecting the unwanted tag as the unacceptable face of capitalism.

Today, the leader may find it harder to shrug off criticism in the words of Tiny Roland “Don’t talk to me about morality and proper behaviour”. Even if the company pays its taxes, global institutions are finding it easier to recognize the intricate way in which ethics and profits are inter-connected and exert pressure accordingly.

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