Ockie
Resident Lead Bender
JOHANNESBURG - The deal which will see Fastjet set up operations in SA is clouded in mystery with very little known about the Zuma-linked majority shareholder in the venture, Blockbuster.
On Wednesday the UK-registered low-cost airline Fastjet announced that it had signed a memorandum of understanding (MOU) with “local South African investment company Blockbuster.”
“A commercial arrangement has been struck between Blockbuster and local operator Federal Airlines … which will allow Fastjet to leverage Federal Airline’s existing licensing infrastructure and deliver its low-cost airline model to the South African public,” it said.
The airline has the ambition of beginning operations on the Johannesburg-Cape town route by the end of May 2013.
Through this agreement Blockbuster would hold a 75% stake in the SA entity, while Fastjet would retain the remaining 25%.
That Fastjet had been willing to take a minority stake appears to be out of its need to comply with SA aviation legislation, which does not permit a foreign airline to own more than 25% of a local airline.
Following the release, the media has widely publicised a ‘link’ between Blockbuster and Edward Zuma, the eldest son of Jacob Zuma, as well as businessman Yusuf Kajee.
However, almost nothing is known about either Zuma’s or Kajee’s roles at Blockbuster, the nature of Blockbuster itself or the nature of the arrangement between Blockbuster and fastjet.
Moneyweb has, however, been able to identify the man who appears to be at the centre of the Blockbuster entity as businessman Paul de Robillard.
De Robillard is linked to fastjet’s majority shareholder, UK-listed Lonrho Plc (JSE:LAF).
Zuma is said to have been brought into the deal to provide BEE credibility and as a “political card” in light of potential regulatory scrutiny.
A dark cloud
Much of the mystery stems from the fact that Blockbuster has little to no public face and appears to have no identifiable history in SA’s aviation industry.
A Google search for Blockbuster reveals little more than a link to the well-known video rental franchise which shares its name. Dig a little deeper and the business directory website, Tuugo.co.za, has an entry for Blockbuster Investments but provides no contact number or physical address.
Similarly, no contact information was provided for Blockbuster in Fastjet’s media release.
The international public relations office advertised to provide comment on the deal referred Moneyweb back to the local PR agency, Africa Practice.
Says Africa Practice’s Hayley Alfers: “I don’t know anything about Blockbuster.”
A director search is slightly more revealing.
According to the search, Blockbuster Trading 53 was only registered in May 2011.
The entity has four listed active directors including Zuma and Kajee.
The other two include Zakkiyah Vawda and Paul de Robillard.
De Robillard has links to fastjet.
He is listed as former director of ‘premium fruit, vegetable and fish supplier,’ Rollex (Pty) Ltd.
In 2010 Lonrho plc became the sole shareholder of Rollex by acquiring the remaining 49% stake in the business held by the De Robillard family trust according to financial website Fin24.
Lonrho, in turn, is a majority shareholder in fastjet.
In a SAfm Market Update with Moneyweb on Wednesday evening, FastJet’s SA COO, Richard Bodin was presented with the question: “you are working with local investment company Blockbuster, 75% of the local business is owned by Blockbuster … Did they approach you, or did you approach them?
To this Bodin responded: “That’s a great question. To be honest, we were introduced – a bit of matchmaking going on.”
Although confirming receipt of a further request to comment specifically on the Blockbuster arrangement, Bodin had yet to provide comment on the matter by the time of publication.
The deal
With Fastjet remaining unreachable for, or unwilling to, comment and with Blockbuster effectively a faceless entity, Moneyweb approached the third player in this deal to shed further insight into the matter.
Local carrier, Federal Air, is “going to handle it (the entire venture) from an operational level. We are going to fly the aircraft, make sure that the check in is handled and provide the licence,” according to Federal Air Ceo, Evan Bailey.
“All revenue comes to Federal Airlines and there is an agreement on what portion of those funds remain with us,” he says.
Despite Fastjet holding a mere 25% stake in the venture “the funding is coming in from Fastjet.”
Asked why Fastjet would be willing to provide the entirety of the funding, reported to grow in excess of £2m, Bailey responded: “I don’t know what their deal is with Blockbuster … at the end of the day I am not privy to what their arrangements are.”
The political connection
Blockbuster “is purely a private syndicate of businessmen and quite honestly old Edward Zuma holds a small percentage, probably 10% or less of the business,” says Bailey.
“It is a private business ‘person’ and for some reason the main guy in Blockbuster does not want his name mentioned … Zuma and others have a minuscule role,” he says.
However, when presented with a list of possible names for the ‘main guy’ in Blockbuster, Bailey had to admit that “Paul (De Robillard) is the main shareholder of Blockbuster.”
De Robillard is a “very wealthy, private businessman,” who apparently has a “friendship” with top management at Fastjet, according to Bailey.
Zuma and Kajee were probably brought on to provide BEE credentials according to Bailey.
“I think the rationale (for getting Zuma involved) was a political card … it is important that we have somebody … we are going to be scrutinised by (regulatory the authorities),” Bailey added.
http://www.moneyweb.co.za/moneyweb-special-investigations/dark-clouds-surround-fastjet-deal
I am starting to dislike this airline more and more I am afraid.
