The ANC has reached a secret out-of-court settlement with an events company it has owed R11-million since its lavish centenary celebrations in January last year.
The settlement agreement allows the ANC to pay off the money to the centenary organisers, the VWV Group, over a year – from April this year to April 2014.
The ANC is yet to start paying and has allegedly asked for more time to raise money. A revised schedule of payments was drawn up and the first payment was expected to be made shortly, the Mail & Guardian was told.
Both the ANC and the ANC Youth League have had liquidation applications brought against them in court in the past six months, raising concerns about financial controls within the ruling party and its youth wing.
In December last year the VWV Group brought its liquidation application against the governing party to court after it failed to pay costs relating to the ANC's celebrations. Many artists and companies contracted by the events company to assist with the staging of the celebrations have not been paid all the money owed to them, apparently as a result of the nonpayment by the ANC.
Informed sources claimed a settlement agreement was reached behind closed doors after the embarrassing liquidation application was lodged in the South Gauteng High Court, but both parties declined to comment. Questions were sent to the ANC, which failed to respond this week.
According to the VWV Group's court papers, the events company entered into a service agreement to provide the ANC with goods and services for their centenary celebrations.
Following the celebrations, a dispute ensued regarding nonpayment by the ANC. The ANC and the VWV Group entered into a settlement agreement, in which the ANC agreed to settle its debt in three payments, court papers stated.
The court papers alleged the ANC had "failed or alternatively neglected to pay the outstanding amount". Mediation was attempted to resolve the dispute.
However, in a letter handed to court during the liquidation proceedings last year, VWV's attorney Mark Saltzman stated that his client had withdrawn from mediation processes.
Saltzman explained that he and VWV were of the view that there was "clearly no dispute".
"Rather, the ANC is simply unable or unwilling to pay the admitted amount that it owes to our client," he wrote.
Although the ANC's former treasurer, Mathews Phosa, previously claimed the money was under dispute as the live performance in Bloemfontein was rained out, the VWV Group proceeded to court with the liquidation application.
Once the secret settlement was reached between the two parties, the liquidation application was withdrawn.
The ANC's attorney, Brian Kahn, did not respond to questions from the M&G about the sensitive issue.
Saltzman also declined to comment this week.
"My client has instructed me not to provide information to the media in this matter," he said.
Despite the party's reticence to discuss the matter of its finances openly, concerns around the evident cash flow problems of the Western Cape ANC are growing as the general election, scheduled for 2014, looms large.
Last year, the ANC in the Western Cape had its office furniture attached by the sheriff of the court and its phone line cut for nonpayment of its R1.8-million debt to the Cape Town International Convention Centre. The Western Cape ANC hosted its provincial elective conference at the convention centre in 2011, but failed to pay for its use of the venue.
The ANC's provincial secretary, Songezo Mjongile, has said its lack of funds will not deter the party from striving to achieve its goal of taking back the province from the Democratic Alliance in the elections.
However, the Western Cape ANC relies on donations from members and its supporters to run campaigns and conferences, and was hoping the ANC would bail it out of its debt.
"There has been no change on the ANC matter," said Zeenat Parker, the Cape Town International Convention Centre's corporate communication manager, this week.
"The outstanding balance is still at R1.5-million."
While the ANC's financial woes are coming to light, the youth league has no assets or money in its accounts, court papers reveal.
The application for the liquidation of the ANC was followed last month by another liquidation application to court, this time against the league.
This application was brought by events company Z2 Presentations, trading as University Events Management, which claims it is owed R15-million for work it did at the league's national congress in 2008 in Mangaung in the Free State.
Judgment was reserved on this matter in the South Gauteng High Court in Johannesburg.
Acting Judge Tony Mundell said the matter was "novel" and he would take time to reach a final decision.
Prior to this application, the sheriff had reportedly twice tried to seize the league's assets, but found there were none.
The youth league's new task team, which has taken over the running of the organisation, claimed earlier this month at a press conference that it was preparing to release details of what it calls "the biggest scandal" to rock the party.
Questions remain about the league's squandered assets, once believed to be valued at more than R300-million. The assets were last held by its dissolved investment arm, Lembede Investment Holdings.
In its court papers, Z2 Presentations owner Willem Adendorff said the purpose of the application was to come to a conclusion on the basis of the league's
inability to pay its debt.
A warrant of execution was issued after a default judgment obtained against the youth league.
The judgment arose from its failure to pay Z2 Presentations for its events management, inclusive of accommodation, catering and related services it carried out, according to the agreement.
"However, a nulla bona return of service was issued by the sheriff on May 7 2009, stating that the respondent [the youth league] did not possess any assets or bank accounts to attach," Adendorff stated in his court affidavit.
Adendorff told the court he had tried over a lengthy period to discuss the matter with the ANC. The youth league had agreed to make monthly payments through the ANC and a few irregular payments were made, he claimed in court.
The M&G understands that a meeting took place between Z2 Presentations and Kahn at Luthuli House in May, which apparently staved off the liquidation proceedings for a few months.
The ANC allegedly said it was involved in membership audits and would respond to the company with a settlement offer, but it never happened.
In his answering affidavit in court, ANC secretary general Gwede Mantashe said that the payments that had been made to Z2 Presentations had come from the ANC. However, he said that the ANC was a separate entity, distinct from the youth league.
"The ANC has made these payments because the respondent did not have the funds to do so," he explained.
Mantashe said it was a matter of record that the affairs of the respondent (the youth league) were "shambolic and chaotic".
The ANC national executive committee had removed the youth league's national executive committee from power and replaced its members in order to investigate its affairs.
"The respondent [the league] at present has no disposable assets, and its operations, which are currently limited to auditing its membership and restructuring the chaos, are being funded by the ANC," said Mantashe in his affidavit.
Johannesburg attorney Phillip Platlansky, representing Z2 Presentations, said he had not heard anything from the court.
"We anticipate judgment will be forthcoming in the near future," he said.
Pressure on Parliament to enact funding laws
Concerned South African citizens and civil society organisations have been vigorously campaigning for Parliament to enact legislation for the regulation and transparency of private funding of political parties.
The My Vote Counts campaign was set up with the primary purpose of pursuing improvements to the transparency, accountability and inclusiveness of elections in South Africa. It hopes to encourage Parliament to enact legislation regarding party funding reform before its term ends in 2014.
Campaign co-ordinator Zukiswa Vuka was this week waiting for a response from Parliament to a letter it sent on November 8 last year, requesting details of its plan to enact the legislation.
Six months ago, the campaigners were informed that the critical issue was on the agenda for discussion at the chief whips' forum of the National Assembly.
To date, it appears no progress has been made in enacting what the campaign says is constitutionally required legislation.
My Vote Counts has asked for a copy of the timetable, which sets out the requisite parliamentary processes, to be provided to it within six months.
"We expect Parliament to respond some time this week," said Vuka.
Campaigners intend to make themselves heard if they do not receive a response, or alternatively are given reasons justifying the decision not to implement party funding legislation.
"Should the above publication (the response) not take place by the said date, our client will be left with no option but to seek remedies through the courts," Webber Wentzel attorney Vlad Movshovich warned in a June 4 letter to the Speaker of the National Assembly Max Sisulu, and others. – Glynnis Underhill