Microsoft Word 6-057 a gentler Capitalism Final version June 2006. doc

 

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was to protect the NUM’s investment, in large measure made up of mineworkers’ 

pensions, in Johnnic.  Along with her mentor, Cyril Ramaphosa who was the chairperson 

of the board, Charnley found herself sitting on the same side of the table as management. 

Charnley was familiar with some of her fellow board members. For example, she knew 

Anglo American’s Head of Corporate Affairs, Clem Sunter, from the Vaalreefs Disaster 

Trust. One hundred and fourteen men had died in a terrible mining incident in 1995 and 

Charnley had been one of the NUM negotiators to secure the welfare of the widows and 

their children.  

 

Gaining Control 

 

During her tenure at Johnnic, Charnley played a key role in transforming the 

passive holding company into an active corporate center with lucrative interests in media 

and telecommunications. From her first meetings on the Johnnic board, Charnley grew 

increasingly concerned about what she saw as a Johnnic’s lack of strategic direction and 

limited involvement with its investments: 

 

The way boards were often run –they were all friends, and had a 

cozy relationship, but I could never understand what Johnnic was really 

doing.  I would ask, “What’s your strategy?  How does that budget link to 

that strategy?”  But I was never answered.  With BEE I had been asked to 

sit on the boards of many important companies.  But having an 

empowerment presence on a board does little good for black South 

Africans.  You don’t have much influence on strategy, hiring practices, or 

company culture. 

Charnley decided that if she wanted to have impact, she needed to focus her efforts.  To 

the surprise of many of her peers, she resigned from the boards of most of the union 

retirement funds on which she sat and concentrated her efforts on Johnnic.  In August 

1997, she was appointed by Ramaphosa and the NEC as an executive in charge of 

strategy and new business development.  She hoped that, as a member of executive 

management, she would be in a position to protect the NUM’s investment by helping the 

company develop and execute a robust strategic plan.  Charnley observed: 

 

When I joined Johnnic, the first black person and the first women, 

they expected me to occupy an office, attend board meetings, and just be 

happy because I got a good paycheck.  But, in our society, there was no 

way I was going to do that because you just don’t earn money if you don’t 

deliver.  It’s unethical. We were the first generation of black people who 

had been successful. It was important for us to ensure that while we were 

forming a black middle class, we still had a social conscience.  I knew that 

I was in Johnnic for a purpose. 

One of Charnley’s first tasks was to recruit a new financial director to replace the 

incumbent director who was taking early retirement. Determined to find a black 

candidate, Charnley consulted with friends and colleagues. Many were not optimistic for 

Charnley since only 5% of all the chartered accountants (CA) in South Africa were black. 

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Ever persistent, Charnley learned of Jacob Modise, a 31 year old, black CA working at 

Eskom—South Africa’s energy parastatal. Many board members were unenthusiastic 

about his youth and relative inexperience given the challenges facing the company. 

However, Charnley insisted that Modise was the right person for the job, arguing, 

“There’s no black person who will have all the experience because we never had the 

opportunity before. Look what he has accomplished at Eskom. We must give him a 

chance.” Charnley persisted and convinced first Ramaphosa, her mentor, then the rest of 

the board. Hiring Modise was not simply moving a coveted black professional from one 

company to another; it was offering an opportunity for professional development to a 

young black professional who had shown promise.  

 

Over time, Charnley transitioned from her position as a non-executive board 

member to an  executive in charge of strategy and new business development.  Her 

biggest move was divesting profitable, but mature assets, to purchase telecommunications 

firm MTN.  By January 1999, Johnnic effectively controlled just under fifty percent of 

MTN making it the majority shareholder.  Given Johnnic’s significant stake in MTN, the 

Johnnic board decided that Charnley would assume a new position, executive director of 

telecommunications charged with ensuring the health of MTN.   But before Charnley 

moved into her new role, she had a personal matter to which she had to attend.  Charnley 

went on maternity leave in February to have her third child.  A white co-worker 

recounted an exchange the two had at the time, which she felt epitomized the dramatic 

career transition Charnley had made in her short time at Johnnic: 

 

I asked her, “Irene how long are you going to be gone?” And she 

said, “Oh you know, maybe six weeks, maybe a bit less.” Having recently 

had my third child as well, I said, “Irene, that’s not very sensible.” She 

said, “Maybe so, but my real concern is that the labor movement doesn’t 

hear what I am doing. I’m the one who negotiated six months statutory 

leave out there in the market.  And here I am taking only six weeks.” 

 

  

The Transformation of MTN 

 

MTN was founded in 1992 by two white South African entrepreneurs.  From the 

moment the first cellular network went live in 1994, South Africans eagerly adopted the 

new technology.  Initial projections estimated a subscriber base of 225,000 after five 

years; MTN alone had 2.5 million subscribers after that time period.  By the time Johnnic 

consolidated its position as the majority shareholder in January 1999, MTN was a 

company at a cross-roads.  While its revenues continued to grow, the sustainability of its 

strategy was in question.  MTN’s core market, which consisted mainly of white 

consumers and businesses, was almost saturated.  The company had begun to pursue 

alternative avenues of growth including international expansion.  In addition, like many 

high-growth entrepreneurial ventures, the company’s structures, systems and processes 

were in need of rationalization and upgrading. 

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