The National Prosecuting Authority’s statement that the African National Congress owns a 10% stake in Schabir Shaik’s Nkobi Holdings — meaning the party stood to benefit from the arms deal — seems to reinforce suspicions it has moved into business it would rather keep from the public eye.
South African political parties are not barred by law from making business investments as a fundraising mechanism.
But it becomes an ethical problem when a company in which a party has an interest tenders for a public-sector contract where members of that party, in government, have powers to sway the contract award.
Conflicts of interest — as this is —are usually dealt with by declaration, so it is there for the public to see, and by recusal from the decision-making process. But parties do not declare, meaning the public is deprived of the means to know whether their elected representatives act in the public interest or in party financial interest.
The charge sheet against Shaik states matter-of-factly that Floryn Investments, a 10% shareholder in Nkobi Holdings, belongs to the ANC.
“Floryn Investments is ostensibly wholly owned by Accused 1 [Shaik]. Accused 1 holds the shares as nominee or cedent for the African National Congress, making the latter a 10% shareholder in Nkobi Holdings.”
Cedent or nominee shareholding arrangements are often used where the real shareholders in a company do not want to be known, and such arrangements are hard to penetrate.
ANC treasurer general Mendi Msimang on Thursday flatly denied the ANC owned a stake, after earlier ambivalent statements from party officials. But it is not the first time an allegation of this nature has been levelled.
The Johannesburg High Court earlier this year awarded millions in damages to a printing company that claimed it had lost a Transnet privatisation tender because it had rebuffed an approach from an ANC treasury representative to hand over 15% of its shares.
The Mail & Guardian subsequently established that the representative, Miles “Mr 15%” Nzama, together with Msimang ran a fundraising trust for the ANC. The trust is specifically empowered to own shares in companies, and to do so through nominees.
In May the M&G revealed how, since 1999, an offshore company, the South African Oil Company (SAOC), has benefited from a Nigerian government oil contract issued in South Africa’s name. In spite of this, neither oil nor revenue has come to South Africa.
There have been allegations that the party is a shareholder or beneficiary in SAOC. These allegations have not been confirmed or denied by the ANC.
Institute for Democracy in South Africa analyst Richard Calland this week told the Cape Town Press Club that “business and its hidden hand” had contaminated political decision-making. Idasa is mounting a court challenge to force parties to reveal their funding sources.