Mr Khumalo's fall from grace has been described as the tragedy of an African Icarus. Eight years ago he was on Robben Island with the ANC's imprisoned leadership. Legend now has it that after his release, on the boat back to the mainland, a comrade asked him what he planned to do. Mr Khumalo, something of an entrepreneur since he began collecting used cans as a child in the townships, said he was going to start a bank.
Fours years later he had done just that. Last May he took charge of JCI, one of the country's largest mining houses, in a ground-breaking black empowerment deal with Anglo American. Blacks have political power now but realised where real power lies and that winning the vote will mean nothing if they do not take business by storm. Thus a combination of legislation, political pressure and the need to make up for sins of the past has forced white business to form partnerships, or sell slices of their empires, to blacks.
Much hinged on the JCI deal. It was black business's chance to prove itself. But in nine months the 100-year-old company's value has halved and there are proposals for it to be dismembered and sold to raise enough money to satisfy the shareholders now baying for Mr Khumalo's blood.
There are many reasons why the deal turned sour. Anglo, giant of the white commercial world, received plenty of kudos for leading by example. It also made a 1bn rand (pounds 140m) profit. Mr Khumalo's African Mining Group, it is now clear, paid Anglo too much for JCI. It did not help that the price of gold then went into freefall. Mr Khumalo's lack of management experience and tenuous grasp of the the mining industry also contributed.
Whatever the causes, Jimmy Manyi, managing director of the business association Black Management Forum, admits the failure is a body-blow for black economic empowerment and may put the brakes on a process which blacks complain is advancing at a snail's pace and is riddled with tokenism. Mr Manyi says the disaster highlights the need for a commission to look at empowerment. "There is no real black empowerment in South Africa. A few (black) individuals are enriching themselves but there is no trickle-down effect."
Tony Twine, an economist with Econometrix, says lack of education, training and business experience is partly to blame for slow progress. But he also admits that, despite positive public pronouncements, established business, like all other bastions of white privilege, is dragging its heels. However, he does not lay all the blame for "tokenism" at business's door. New government regulations require white companies to have black partners before applying for state tenders. As a result, they have appointed blacks to lucrative non-executive positions and a small black elite has formed which sits on a multitude of different boards.
This little group gets rich but generally picks up little hands-on business experience; and the black face on the board buys time for companies reluctant to implement empowerment initiatives at other levels which would increase the number of black middle managers from which successful black chief executives might emerge.
For now the government is caught between a rock and a hard place. Mr Twine argues that since white business will never willingly give up what it has, the solution lies in expanding the economy. The government should then ensure black business gets the largest slice of the extra pie, much as the National Party favoured Arikaner - against English - business in the 1950s and 1960s after it came to power.
But for the economy to grow the government needs to keep established business on side. Thus it can apply pressure for change, but not too much. Jenny Cargill, an analyst with BusinessMap, says that the current crisis shows that empowerment has run its first leg. She argues that that leg was important because it gave blacks control of a small - but crucial - number of businesses. But deeper change is now called for, she says, and government must keep up the pressure.Reuse content