Mr Mbeki has pledged economic empowerment during his second term

Tony Trahar said last week that the political risk of investing in South Africa is diminishing, but not gone.

President Mbeki reacted accusing the company of paying black workers badly during apartheid and of withholding investment in South Africa.

Anglo American says it hopes to meet President Mbeki this week.

In an email to ANC supporters published on Friday, Mr Mbeki asked whether the company knew something about the political stability of South Africa that the government did not.

Risk

"The poor and marginalised who worked for Anglo American and other companies for a pittance and built them up during the years of minority rule are today's voters," Mr Mbeki said.

South Africa is one of the world's most unequal societies

"For 10 years they have made it clear that they care too much for the future of their children to have the past and its instincts determine that future.

"They chose reconciliation rather than revenge. Do they deserve to be seen as a political risk?"

Anglo American now says it has full confidence in the country and denies that it is sitting on unvested cash reserves.

Opposition leader Tony Leon criticised Mr Mbeki's reaction as over the top.

Mr Leon accused Mr Mbeki of deliberately misrepresenting Mr Traher's original comments, which appeared in London's Financial Times, and of attempting to smother political debate in the country.

Roots

This row has its roots in the political path adopted by the African National Congress after it came to power 10 years ago.

It abandoned much of its socialist rhetoric and embraced business friendly, market orientated policies.

This political U-turn came in for a lot of criticism from ANC's members, as well as its allies in the Communist Party and the trade unions.

But Mr Mbeki and senior colleagues stuck by their guns, hoping that international investment would flow in, changing the country's economic fortune.

But this has largely failed to materialised - some 1m jobs have been lost and unemployment now stands at 40%.

Many in the ANC feel business has not played its part in the country's transformation from apartheid.

The business community, on the other hand, feels it is being saddled with increasing costs at every turn.

There are also mutterings that President Mbeki has not played his part by sorting out neighbouring Zimbabwe, leading to a perception that the region is not a safe place to invest in.

It is this tension between South Africa's business community and the government that is behind the current row.