Business Abroad: The Belgian Queen

The men who run Belgium’s biggest business assembled last week to pick a new chief for what they call “The Mother Company” and what their many critics call “The State within a State.” In making their choice, the directors of the Société Générate de Belgique bowed to the gusts of change that are sweeping the company, from Brussels to its vast holdings in the Congo. Seeking a successor to close-mouthed Governor (i.e., chairman) Paul Gillet, who is retiring at 70, they skipped over the vice governors and plucked out Director Max Nokin, who, by the high-buttoned standards of La Générale, is both young (53) and gregarious.

Nokin is a trained accountant, engineer and economist who combines openminded vigor with abiding respect for the conventions that have made La Générale one of the world’s most powerful corporations. “Our tradition is to invest in new things that are sure,” says Max Nokin. “Our tradition prevents us from being rash.”

Cooperation. With this credo, La Générale has built up a 15-ft. by 45-ft. library of stock certificates, which represent effective control of corporations worth $1 billion to $2 billion. Through a pattern of interlocking directorates as intricate as a piece of Brussels lace, La Générale controls 10% of Belgium’s economic life—including one-third of its steel and coal production, three-quarters of its nonferrous metals output, and chunks of its banking, electricity, transport and armaments. With a bare 17% of its investments. La Générale also controls at least half the economy of the Congo and, by cooperating with all of that nation’s disputing factions, still manages to prosper.

No one outside a tiny inner circle knows who are the dominant stockholders in La Générale, but the persistent rumor that the Belgian Royal Family owns a major interest is reinforced by the traditional presence of the royal court’s Grand Marshal on the board of auditors. The royal tie dates back to 1822, when King William I of The Netherlands founded the company to finance development projects in his scraggly Belgian province. When Belgium won independence in 1839, La Générale got the country going with loans, and half a century later King Leopold II repaid the favor by picking La Générale to unlock the wealth of his Congo fief.

Criticism. In the Congo. La Générale laid railroads, carved out mines, raised skyscrapers, put up company towns, paternalistically taught its workers to eat off plates and even sent some through high school (but no farther). When freedom—and chaos—came, La Génerale labored to do business as usual. Among other things, this meant paying millions of dollars in royalties and taxes to Katanga Separatist Moise Tshombe, enabling him to buy arms and defy the United Nations.

While this has earned La Générale some harsh public criticism, it has also paid hard dividends. La Générale’s hulking Katanga satellite—Union Miniėre du Haut-Katanga—continues to produce 8% to 10% of the free world’s copper, some 25% of its germanium, 65% of its cobalt. Throughout the Congo, La Générale’s subsidiaries still act as the prime exporters and importers, miners and managers, and are a mighty force in autos, oil, cotton, sugar, rubber, real estate, banking and insurance. La Générale’s Congo investments produced 44% of the company’s profits of $10.5 million last year, and this year’s earnings are expected to be at least as handsome.

Change. But in the Congo La Générale can see the writing on the wall as well as anyone and better than most. Faced with the danger of ultimate nationalization, the company intends to concentrate more of its energies on the “new things that are sure” in other areas, notably in the Common Market and Canada.

La Générale already has 3% of its assets in Canada, controls both the Sogemines investment company (with interests in Brockville Chemicals, Inland Cement, Iroquois Glass) and the Miron building materials company. In Europe, La Générale owns 16% of Luxembourg’s huge ARBED steel works (1960 sales: $700 million). It has also joined with the U.S.’s Olin Mathieson to produce oil derivatives, and with the U.S.’s Union Carbide to make polyethylene within the Common Market.

The continuing shift to European investments will be accelerated with the coming to power of Max Nokin, who has made his career in the offices of Brussels instead of under the joyless African sun. But though there will be innovations, there will be no icon smashing. Says Nokin: “We have to change with the prudence expected of a woman who is 139 years old.”