Cape Town - South Africa can be thankful that foreign exchange controls precluded local investment institutions from participating in the kind of investments that caused major international financial institutions to buckle in recent months.

This was the opinion of Johann Rupert, chairperson of long-term investor Remgro, who as early as May 2007 expressed concern about global financial systems (an opinion that at the time earned him the tag "Rupert the Bear").

Addressing shareholders at a general meeting in Somerset West on Tuesday afternoon, Rupert said if forex restrictions had not been in place, local investment institutions would probably have joined the (sub-prime) party.

'I blame everybody'

"Thank goodness for forex controls, otherwise our investment geniuses would have participated."

He said SA was in a "lucky position" - thanks to the treasury - of having the country's banks still in shape, although it was unlikely all local banks would emerge completely unscathed.

Rupert argued that blame for the gridlocked financial system could not be put on Wall Street and investment bankers. "I blame everybody."

He said in the quest for superior returns investors piled debt onto equity. "People assumed bigger and bigger risks ... to blame investment banks then is a little short-sighted."

Rupert pointed out that initially, investment banks were taken to task for not offering credit to poor communities. "They did just that, and now they are in the dock for providing this funding."

Rupert hoped the international financial system would hold and that central bankers and bankers would work together. "What we have now is gridlock. Banks don't trust one another."

Reuters reports that shareholders in Remgro backed a plan to spin off its 10.7% stake in British American Tobacco on Tuesday, taking Switzerland's Richemont a step closer to completing its restructuring.

Remgro and Richemont said in August they would spin off their combined 30.1% stake in BAT under a revamp prompted by tax changes, a move that will make the Swiss firm Europe's second biggest pure luxury specialist.

"At the general meeting of Remgro shareholders held today ... all the special and ordinary resolutions were approved by the requisite majority of votes," Remgro said in a statement.

Shareholders in Richemont, maker of Cartier watches and Piaget jewellery, are due to vote on the plan on Thursday.

- Fin24.com and Reuters

More on Remgro, BAT, Reinet Investments and shareholder activist Theo Botha in next week's Finweek.