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SWAN SONG FOR CASINO BOSS

Captain of gaming industry calls it a day after a chequered career

At the end of September 2011, an era came to an end in South Africa when Jabu Mabuza retired as chief executive officer of Tsogo Sun Holdings. From taxi driver to casino and hotel boss, he has come to personify the gaming and leisure industry in this country.

After some 14 years, Mabuza has left the hot seat of a R20-billion listed group that he helped build from a mere idea, to being rated among the top six gaming and hotel groups in the world.

What his mentor and friend Meyer Kahn meant to South African Breweries (SAB) before it embarked on its global expansion under Graham Mackay, Mabuza has come to mean to Tsogo Sun.

He leaves the industry filled with pride and good memories, happy that he achieved what he set out to do and that the group was ripe for new, younger leadership to tackle the next phase. But he also leaves with a few concerns for the future of the gaming industry in South Africa, one that is often criticised by a variety of self-appointed moral watchdogs.

Mabuza, who is also non-executive chairperson of both the Casino Association of South Africa (Casa) and South African Tourism, left the helm at Tsogo Sun upon culmination of its merger with Gold Reef Resorts, resulting in a group that now owns 14 casinos and some 90 hotels.

But he did not sever all ties immediately, as he has accepted a request to remain on the board as deputy chairperson for a further three years.

“I have always wanted to retire at 55, an age I will have reached in 2013. The listing of Tsogo Sun, which was the culmination and conclusion of the Gold Reef transaction – in which we reverse-listed into Gold Reef and the name changed to Tsogo Sun Holdings – seemed to be my swan song,” says Mabuza.

“Having been here as long as I have – some 14 years in different positions, but doing the same thing – I felt the time had come to hand the baton to a younger generation.”

He will be succeeded by the group’s current chief financial officer Marcel von Aulock, who has worked closely with him for the past eight years and whom he calls “a youngster in his 40s”.

Mabuza says that while CEOs never get to appoint their own successors, they get to create “a crop from which the board and shareholders can appoint a successor”.

“So I am comfortable and very excited that they have chosen Marcel, and I am proud to have led an organisation that could grow its own team the way we have done,” he says.

“I am leaving at the time when I think the organisation is in a different space and needs a different type of leadership.”

As for the future, Mabuza says he has made no plans as yet: “I want to switch off for the first six months until March 2012, getting up when I want to and not when I have to.

“I have cattle and sheep on my farm at Ermelo, and I have various places to stay in Knysna, Magaliesburg and on my farm. So I have quite a lot of things to do.

“The only thing that I am committed to do that will involve travelling, and that I look forward to very much, is picking up my daughter from school on Fridays and dropping her off again on Sunday evenings,” he adds.

“We will see what happens after this period, but I am also involved with SA Tourism, and we have our job cut out for us – the industry is taking strain.

“We also need to sort out the appointment of the next chief executive,” says Mabuza.

“Then there is the Casino Association, with the industry having its own challenges ranging from the threats of a withholding tax, an increased gaming tax, increased levies, challenges from black economic empowerment (BEE), and the gaming review commission. These will keep me relatively awake.

“So in my role as chairperson of Casa and SA Tourism, I promise you: I will still have the need to read Business Day,” he notes with a chuckle.

Regarding the pressure faced by the gaming industry, Mabuza says: “We are faced with a lot of inconsistencies in regulatory and policy space and a lot of comments that do not seem to be backed by facts, but are remarks that are related anecdotally to the alleged damage that casinos do to society.”

He counters this by stating that in a democracy, people have the freedom to choose.

Deciding how they should spend their money on their behalf is patronising, condescending and insulting, he believes.

“We as an industry have been very responsible. In the last 15 years, we have added more than R100bn to the country’s GDP [gross domestic product] directly and indirectly. We have created 100 000 jobs; we have paid a lot of money in taxes – both national and provincial.

“This industry is the most legislated that I know of in the world, and we have taken our responsibility seriously. We understand there are people who cannot afford to lose their money, and it is against that background that we supported the initiative of a national responsible gambling industry,” says Mabuza.

He adds that his group has “done more for empowerment than any other industry in this country”.

“When we set up this industry, and Tsogo Sun in particular, we took a view that 30% of the people we employ must be people who have never worked before. With the recession in 2009, we took a decision not to retrench any workers for short-term benefit, but one which would have a long-term effect on society.”

The early days

The journey of the past two decades has indeed been something of an adrenalin drive for this former taxi driver. When Mabuza set out in life, he had no idea he would end up where he is today.

“Life deals a hand of cards and you have to deal with them,” he says, revealing something of the gambler, perhaps?

Mabuza was born in what he calls “the small dorpie” of Waterval Boven. When his family was forcibly removed and resettled on trust land in White River, he went to live alternately with his two grandmothers and later with an aunt in Daveyton near Johannesburg.

He was expelled from junior secondary school in Komatipoort, after being caught up in the 1976 student riots in Soweto, but later matriculated in Durban.

In 1980, Mabuza went to work for the then Department of Bantu Affairs as a clerk of the Court.

In Daveyton, he started driving taxis to raise his university tuition fees and later became a taxi owner, joining the then South African Black Taxi Association (SABTA), of which he later became the commercial head.

In 1981, Mabuza enrolled for a BProc degree at the University of the North, but dropped out in his second year. “I went back and continued to drive taxis and did a lot of this and that, working for a marketing research company, among other things,” he recalls.

In October 1988, he was a founding member of the Foundation for African Business and Consumer Services, becoming its CEO in 1990.

“In June 1993, Meyer Kahn asked me to join SAB as group advancement manager in the Chairman’s Office; and as I understood it, the job was meant to advance the group, its products, its people, its market and its environment,” Mabuza relates.

“I got exposed to a number of affiliates in the group and sat on the boards of Afcol, OK Bazaars (before it delisted), Amalgamated Retailers, ABI, the Southern Sun board and others. I got involved in the brewing business more on the offshore side.

“Four years down the line, it was felt I had been sufficiently grounded in corporate life, and there were quite a few opportunities opening up for me in the group. Ron Stringfellow (then CEO of Southern Sun) approached Meyer Kahn, and Meyer released me to Southern Sun. Thus, in 1996/97, I moved to Southern Sun to head Southern Sun Gaming Investment, which was the vehicle through which Southern Sun owned its share in Tsogo Sun,” he says.

“Parallel to that, I was chief executive of Tsogo Sun. So I was involved in leading the team that went in pursuit of casino licences, and that’s why I say I have been doing the same thing in different titles for the last 14 years.”

Tsogo Sun was formed in 1996 by Southern Sun in partnership with a consortium of black business groupings and some unions with funding from SAB, the 100% owner of Southern Sun at the time. Already having the money, black economic empowerment and hospitality and tourism expertise it required, the new group forged a partnership with the legendary Las Vegas casino group, MGM Mirage, to gain gaming management experience.

In the meantime, under Mabuza’s leadership, it engaged with the government and other role-players at the time to establish the casino industry in South Africa, set up its regulatory framework, and to acquire casino licences.

In 2003, Southern Sun sold half of its stake to the empowerment consortium, while SAB sold 51% of Southern Sun to the group, allowing Tosgo Sun to be established with 51% black control and 49% held by SAB.

Today, the group operates 14 casinos in every corner of the country, each under its own name; and some 90 hotels grouped into different brands such as Southern Sun, Garden Court, StayEasy and Formula 1. Among its flagship operations are the Montecasino complex in Fourways, Johannesburg, Suncoast in Durban, Gold Reef in southern Johannesburg, and more.

It is no wonder that among his role models Mabuza counts Kahn, who he says “remains the beacon and, however, high I might get, I still look up to him.”

His earlier role model was his father, who now lives on his Ermelo farm – his parents never having married. His mother now lives in Eldorado Park.

Mabuza singles out as another role model James Chapman, who was national adviser to SABTA and its commercial head before him, and “from whom I learnt all about business ethics”.

While on a train to school in Durban in 1997, he met his future wife, Siphiwe, whom he married six years later. They have two sons, Lwazi (26) and Sakhiwo (22), and a daughter, Mbali (15), whom he calls “my baby”. He calls Siphiwe “the rock of my life” and says he is grateful to his family for giving him the support to pursue his career.

“It has been an incredible journey, and one I hold dearly with a big sense of pride and achievement. It has given me purpose,” says Mabuza. “I have been very, very fortunate to get to where I am, and I know there are many people out there who are more deserving of such opportunities, and can do what I do 10 times better, but just never had the opportunity, as they unfortunately never were at the right place at the right time to have met Meyer Kahn,” he says, displaying the typical humility with which those who know him are familiar.

Despite a busy working life involving constant travelling, Mabuza has always found time for some of his other passions such as golf, tennis and Orlando Pirates.

Listing the latter’s recent successes, he says: “We are such a good team that we don’t get satisfied easily – so much that after winning three trophies last season, we fired the coach!”

Source: Back Business Quarterly – Stef Terblanche