ANC’s shady loan scheme

2011-11-19 17:21

A dodgy loan scheme run by the ANC in Parliament has been exposed, leading to Parliament temporarily suspending funding to the ruling party.

The suspect transfers between the ­party’s constituency and caucus accounts directly flout Parliament’s rules and ­involve millions of rands.

An access to information application to Parliament by Media24 Investigations succeeded in gaining access to audit reports from the last three years relating to more than R297 million which Parliament hands out each year to political parties.

The key purpose of the money is to allow parties to run constituency offices to bring Parliament closer to the people, and give support to Members of Parliament.

The ANC and other political parties – barring the Democratic Alliance, United Democratic Movement, African Christian Democratic Party and African People’s Convention – refused to make the ­audit reports public earlier this year.

The funds are governed by strict rules to prevent the money from being used for anything other than parliamentary work. The ANC receives more than R130 million annually for its constituency fund and ­another R40 million for its caucus.

The audit reports reveal that in 2009 the ANC in Parliament overspent its ­caucus fund by R26.5 million, and that ­auditors warned the fund could only be regarded as a “going concern” if future grants from Parliament were guaranteed.

Parliament confirmed this week that the ANC’s failure to comply with its policies had resulted in its funding being temporarily suspended. A spokesman said the funding has since been reinstated, but wouldn’t say what had happened in order for the funding to continue.

“Funds transferred (from Parliament) to any party which has either a negative audit outcome or spending which isn’t in line with the policy provisions, is suspended until the accounting officer of Parliament receives either satisfactory explanations or a plan on how issues will be corrected in future,” the spokesperson said.

The Congress of the People also had its funds cut off following a forensic investigation which revealed R5 million of ­constituency funds was paid into party coffers.

The financial statements of the ANC’s caucus and constituency funds show that in 2009 it shifted R9.6 million out of the constituency fund into its caucus fund in the form of an “unsecured”, “short-term” and “interest-free” loan.

Last year and this year, the party’s caucus fund – intended to cover the running costs for its elected officials and support staff – loaned its constituency fund more than R27 million in the same manner, and included funds for a large IT project which was apparently abandoned after the money was spent.

Under current policy, parties are not ­allowed to make loans from their parliamentary allowances. The policy lists specific purposes for which the funds must be used, including staff, office equipment, maintenance, supplies and municipal rates. It was introduced in 2005 following allegations that some constituency offices refused to assist non-party members.

“It’s clear that money for constituency work should not be funding the caucus,” said an accountant who had sight of the accounts but asked not to be named.

“It was signed off by the relevant parties in June 2009 without blushing, and the fact that this was subsequently ‘corrected’ a year later does not excuse the ­improper action at the time,” the accountant said.

Another expert with intimate knowledge of Parliament’s financial processes said: “The intention was and should be to provide services to constituents and not loans to political parties so they can conduct political party activities to the exclusion of non-party members in the constituency. Parliament should be taking up the matter in terms of its disciplinary rules.”

Moloto Mothapo, spokesperson for the ANC in Parliament and for the party’s parliamentary leader Mathole Motshekga, did not respond to a request for comment. ANC national spokesman Jackson Mthembu said: “I don’t speak for ­Parliament.”

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