Comrade Capitalist

Former Marxist Guerilla Tokyo Sexwale Becomes A Millionaire

There was a time, not all that long ago, when it was unthinkable that South Africa would have a black president.

It was unthinkable also that out of one of those black townships that existed under apartheid would come a business mogul worth hundreds of millions of dollars.

Unthinkable? Meet Tokyo Sexwale, whose journey has been as remarkable as that of South Africa itself. He's gone from being a poor kid in Soweto to Marxist guerrilla to political prisoner.

And now, he's the most prominent example of a new arrival on the South African scene -- the mega-rich black capitalist. Correspondent Bob Simon reports.

You can often find Tokyo Sexwale right next to Nelson Mandela, now, in post-apartheid South Africa, and back then, during the struggle.

Ten years ago, he was rallying the masses toward victory for the Communist party. Today, South Africa has a burgeoning black bourgeoisie, with Tokyo Sexwale its most prominent member.

He's one of a handful of black leaders and former political prisoners who have gotten really rich by converting their political capital into capital.

It's all courtesy of something called Black Economic Empowerment, a kind of affirmative action program in which white owned companies have been selling off chunks of their businesses to blacks. Special deals on favorable terms, all to compensate for the fact that, under apartheid, blacks were excluded from the economy.

"Three percent of the total market capitalization of the Johannesburg Stock Exchange is in black hands. Three percent. Now we've got a choice," says Sexwale. "What do we do? Our solution is, let's build it ourselves."

Well, not exactly. The most successful black businessmen have had some help from white corporations. Since apartheid ended, white companies have been afraid for their survival under the new black government, and they've been eager to win lucrative state contracts, so they've been offloading parts of their holdings to blacks... especially black politicians. Or at least some black politicians.

"You need to be palatable and acceptable to your white business, because white business still holds the purse strings, and Tokyo Sexwale is extremely palatable," says Alec Hogg, South Africa's leading financial analyst and broadcaster. For the past six years, he's been tracking Sexwale's rapid rise in the business world.

"I think he found the right people to back him. He found one of the leading banks in South Africa, which has virtually given him an open checkbook," says Hogg. "And as a consequence of that, he's been able to put together a number of deals - many, many deals in many different areas of the economy."

That's why he's become known as 'Deal-A-Minute' Sexwale, and today his companies are worth about $500 million. Since South Africa is a country rich in minerals, he's become a mining mogul in gold, platinum, and diamonds. But that's not all. He's got interests in banking, engineering and health care.

Sexwale's sudden success is all the more astonishing when you consider that he grew up in Soweto, the black township outside Johannesburg. Under apartheid, blacks had to live in these segregated and downtrodden areas. They weren't allowed in white neighborhoods.

But even here in their own townships, they couldn't own their own homes or their places of business. What's more, black businessmen were only allowed to trade in a couple of dozen basic commodities: salt, cooking oil, paraffin. Things like that.

In those days, it didn't even matter if blacks did their patriotic duty. Like Sexwale's father, who fought against the Germans in World War II.

"And he came back home. And they gave him a bicycle when his friends were given farms. Because they're white," says Sexwale. "So I was born within those circumstances. Very poor. Nothing. I was born in nothing."

Sexwale joined Nelson Mandela's African National Congress, the ANC, which sent him into exile for military training. It was the height of the Cold War, and the ANC was socialist, so he went to the Soviet Union. Soon enough, he was back, fighting the guerrilla war against apartheid.

He saw himself as a kind of Fidel Castro. But eventually, he was captured, tortured, and sentenced to 18 years in prison. He was sent to South Africa's Alcatraz - Robben Island - where Nelson Mandela was already being held.

For centuries, Robben Island had been a penal colony. Today, it's one of South Africa's most popular tourist destinations.

"When we got here the reception committee was not what you are seeing. There were dogs here, there were guns, there were chains. We were all black; they were all white," says Sexwale.

Under apartheid, all political prisoners were sent to Robben Island, so they'd be cut off from the outside world. But they turned their isolation to their advantage. They held clandestine reading groups, teach-ins, seminars in race relations and socialism. The prison became known as "The University," and Sexwale was one of the favorite "professors."

"We used to see that he was a musician, a great musician. He used to lead us with many freedom songs," says Tsediso Phofu, another political prisoner on the island, who was in the same cellblock as Sexwale.

"Tokyo was a good man," says Phofu. "He was my tutor, teaching me a bit of Russian. He was a socialist, out and out socialist."

Sexwale was also a ringleader in the constant battle for better conditions, a battle in which prisoners could summon the help of legal counsel.

"One of the warders came to me and said, '4178 says that he has to meet you,'" recalls Judy Van Vuuren, a paralegal who worked for a Cape Town law firm. "I was very intimidated by him because he had this enormous presence, a huge presence in this green uniform. He was larger than life. I don't know. It was just very strange."

Strange, because their meetings were always watched closely by guards. And stranger still,… because the meetings began to be about more than just prison business.

"I suppose at that time we were really falling in love with each other," says Van Vuuren, even though, under apartheid, love between blacks and whites were illegal. "We couldn't communicate freely like other lovers, wives. Anyone could say, well you know, 'I love you.' We had to do it through smuggled notes all the time, you know, try to touch each other's feet under the table, and just little touches, and speaking with the eyes really."

It was visits from Judy that kept Sexwale going. That and Cape Town on the horizon.

"It was a mistake for them to put us here, because we could see land, land, land all the time. Just the sight of land that for us was always a sign that one day, we'd be free," says Sexwale.

And in 1990, Sexwale along with all the other Robben Islanders was released. Tokyo and Judy soon married. But then tragedy struck. Sexwale's best friend, another rising star in the ANC, was assassinated.

In his grief, Sexwale was suddenly thrust onto the national stage. And when the ANC came to power, President Mandela made Sexwale governor of the richest state in the country.

He became a prudent fiscal manager, popular with the white businessmen who had feared black rule. So five years later, when he decided to leave politics and join them, they helped him find the capital to get started.

"They're not capitalists in the sense that you and I understand it. I think crony capitalism would be perhaps a better definition. And work it through: Where did you, where did these individuals build their wealth? It's because of who they knew, and who they knew in the political ruling party," says Hogg.

Do you have to be revolutionary to get rich? "In the past indeed, but not, ah,not today," says Hogg. "Their minds have changed."

And so has their lifestyle. These days, Sexwale has a vineyard in South Africa's most beautiful valley, and a fabulous house in an exclusive Johannesburg neighborhood, which used to be whites only.

Did Sexwale now want to live like them? "You go there, and play their games on the stock exchange, but with a different objective. You spread the wealth. That's why I am in business today. Am I a normal businessperson? Certainly no. Will I become wealthy," says Sexwale.

"Capitalism in South Africa was limited to white people. And we're fighting against that. Fine. Let the wealth of the country be shared by as many people as possible."

And Sexwale says he's doing his part. He routinely includes a trust for former political prisoners, community groups, and other charities in his empowerment deals. Still, in the New South Africa, the poorest blacks have gotten poorer -- including many former political prisoners.

Remember Phofu, Sexwale's fellow inmate on Robben Island? He founded a school for the mentally disabled, but still makes less than $500 a month, and lives in this one-room apartment with his wife and daughter. He says Black Empowerment hasn't benefited him one bit.

"I feel I've been abandoned. I feel somehow you even regret that what it is that we fought for. Why were you fighting the struggle, for the nation, or for certain individuals to be rich? Meanwhile, you remain in poverty," says Phofu.

"Black Economic Empowerment is good when you look at it in black and white, but presently how many black people have been empowered?"

"The true fact of life is that you'll not succeed equally the same. There are people sometimes I know and I believe that they would like to hold successes against those of us who succeed. And remember: We carry those political prisoners by putting them as shareholders in our businesses," says Sexwale. "By the way Bob, we don't have to. It's out of pure philanthropy of thinking about those you were with in prison. There's no law, no rule to help anybody."

No matter how many blacks are helped, there's no question Black Economic Empowerment is booming. The international accounting firm Ernst & Young recently concluded that last year, the total value of Black Empowerment deals rose from $2 billion to more than $6 billion. Not only that: 60 percent of those deals went to consortia led by either Tokyo Sexwale, or one other top black businessman.