Rich pickings

2008-06-10 00:00

IT suddenly struck me a few weeks ago that Chancellor House, the investment wing of the African National Congress (ANC), poses a real threat to democracy. It is not very easy to find information about its investments on the ANC website — no real hard facts — presumably to protect itself and its “donors”. However, it has been able to acquire a substantial investment portfolio. Most of what is known is due to the efforts of investigative journalists and others.

Chancellor House is wholly owned by Chancellor House Trust which can direct the profits to the ANC. This is an ANC vehicle to make large amounts of money from investments. These investments are wide ranging, spanning energy, IT, engineering and logistics. How it came about and had the money to start up is anyone’s guess, especially as the ANC was in financial straits when it got the “oilgate” money from Sandi Majali.

Be that as it may, it has been able to amass a sizable investment which must be due to both Black Economic Empowerment and the way business has been able to cozy up to the ruling party and see nothing wrong in this or possible conflicts of interest. The idea at the root of this entity is to take advantage of state enterprises and government institutions by getting government business through tenders for goods and services and large capital projects. In this way wealth is transferred from public institutions, not merely private institutions, but to ANC-owned companies or companies in which the ANC holds significant shareholding. The problem with this is not merely a conflict of interest but the corruption that must follow if ill-equipped, under-resourced providers are given preferential treatment or if entities with a lack of specialised knowledge are preferred. It allows for insider knowledge and subversion of the tender process. In South Africa where there is, to all intents and purposes, a one-party rule and other parties stand on the periphery of decision-making, the spectre of a ruling party having such huge resources poses a very real threat to democracy and issues of governance.

In case there is even a shadow of doubt about this the figures speak for themselves. This is what is known because information is traceable through company registers etc, and excludes assets not readily traceable. It has been estimated that the ANC has assets of R1,75 billion and has been involved in deals worth billions (manganese R7 billion, fertiliser R14 billion and Eskom billions).

Before Polokwane six of the National Executive Committee (NEC) members controlled

R2,2 billion of JSE equity, and with the election of Tokyo Sexwale this added a further R1,3 billion. There are also other millionaire or billionaire members who are not on the executive but who have influence. This surely makes it a party of, and for, the rich in spite of all the rhetoric.

There are significant ways in which all this money can be used — not least of which is to buy favour. Brett Kebble and Schabir Shaik are not the only culprits who have used money to exert pressure. Sexwale used his considerable clout when he backed Jacob Zuma for the presidency and has handed out large amounts of shares to selected individuals. Valli Moosa, the non-executive chairman of Eskom, was an ANC fundraiser when Eskom gave contracts to companies allied to Chancellor House.

The rise of the oligarchs in

Russia has parallels here. These men, some of them part of the inner circle of the ruling caste and of Yeltsin in particular, made vast fortunes by getting assets cheaply when these were privatised. This was a diversion of assets from the Russian people into the pockets of individuals. All went well until a change in political leadership. Vladimir Putin was in no mood to stand for politcial interference when they tried to use their wealth. Mikhail Khodorkovsky sits in jail after making a fortune from oil and gas, most probably more because of his support for opposition parties than fraud. Boris Berezovsk is in London fighting extradition be-cause he too meddled and tried to form his own political party, and, having gained control of certain media and newspapers, became a threat.

There is a lesson in this. At some point the interests of the oligarchs, many of whom came from the ranks of the ruling party, collided with the interests of the ruling party. In South Africa the three — the rich tycoons, those who control the wealth of the party and the ruling party — can be conflated and rise above the factionalism within the ruling party, but this need not last forever, as the spoils are vast.

Accreditation at conferences has been a contested issue in the ANC and its partners because branches either had too few paid-up members or too few to constitute a branch. A membership fee is important and is a contract between the person and organisation. These members have a say in the direction an organisation takes. When a party has such vast assets the membership fee is no longer of consequence and the party will become divorced from its membership. Membership oversight is lost. The party is controlled by a few. The door is wide open to abuse of power not only within the party, but because it controls state power that extends to society at large.

In the run-up to Polokwane it was as if nothing else mattered and the government seemed overcome with inertia except for electioneering. The spectacle of the ruling party being driven by factional war over the control of these investments is not far fetched given what happened at Polokwane. There are rich pickings for which-ever faction has the upper hand. Who controls the purse strings of the investment trust will be hotly contested. These battles inevitably spill over into society. If Polokwane is the benchmark of future up-heavals, we will see the government regularly in shutdown mode, as party conflict takes centre stage.

How this matter will be resolved is anyone’s guess but one thing is clear — the citizens of the country will not gain anything. They have the unhappy distinction of having some of their contributions to the fiscus diverted to make a political party very rich, irrespective of whether they support it or not.

• Nina Hassim is a pharmacist and a former political activist.

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