ANC admits it used BEE funding front

ANC secretary general Kgalema Motlanthe has admitted that Chancellor House — the ’empowerment” group exposed by the Mail & Guardian last year — is a ruling-party funding vehicle.

Motlanthe’s admission was contained in articles on the ANC, business and funding published in the Financial Mail last week.

He is quoted as saying that Chancellor House is an ‘ANC vehicle” whose sole purpose is funding the ANC.

The FM also claimed Motlanthe had not heard of Chancellor House until contacted for comment before publication of the M&G exposé. Chancellor House reports to Motlanthe’s ANC colleague Mendi Msimang, the party’s treasurer general. Neither was willing to comment at the time.

His admission reopens the debate about whether it is ethical for the ANC, as the governing party, to enter business deals dependent on government contracts or licences. In a twist, Motlanthe himself appears to have spoken against the practice.

The M&G, in association with the Institute for Security Studies (ISS) corruption and governance programme, last November identified Chancellor House, which has extensive ’empowerment” stakes in minerals, energy and other economic sectors, as ‘a business front set up by the ANC to make profit on its behalf”.

As many of the deals Chancellor House had pursued, including significant manganese rights obtained in the Kalahari, depended on government discretion, the ANC ‘has been both player and referee”, the M&G/ISS said.

Motlanthe this week failed to reply to new M&G questions, including whether the ‘conflict between ANC and public interests” that arose from the group’s activities concerned him. But the FM‘s Carol Paton, who wrote last week’s articles, confirmed that in an on-the-record interview she had with Motlanthe last year, he had spoken against such conflicts of interest.

Paton’s notes of the interview reflect him saying: ‘The ANC can have an investment vehicle — but it must do business out of government procurement, even outside of South Africa. So there’s no conflict of interest.”

A consortium including Chancellor House and Russian oligarch Viktor Vekselberg controversially obtained lucrative manganese prospecting rights in the Kalahari from the department of minerals and energy in 2005.

Other investments include a 25% stake in Hitachi Power Africa, which has bid to construct Eskom’s new R26-billion coal power station near Lephalale in Limpopo.

ISS corruption and governance programme head Hennie van Vuuren said: ‘After a lengthy silence, the existence of an ANC front company that is vying for government contracts is no longer in dispute. A real danger exists that the interests of Chancellor House — and its political masters in [the ANC headquarters of] Luthuli House — could trump those of the public.

‘It also remains unclear exactly who in the ANC knew about Chancellor House and what threats such front companies pose to genuine internal democracy in the ANC. The danger of alternate centres of power created by such funds deserves reflection at the next NEC meeting and the national conference.”

The FM painted a shocking picture of the way ANC finances are run, and of intra-ANC squabbling over government tenders and contracts. Bending rules ‘has become a culture”, it said, and the politics of the ANC had become ‘distorted”.

‘This commercialisation has driven a profound change in the nature of the ANC. Once local ANC meetings were all about policies and strategies — the transformation of South African society according to the ideals the party championed for decades. Now these gatherings are frequently preoccupied with business opportunities and who should have access to them.”

It quoted Motlanthe as confirming: ‘The rot is across the board. It’s not confined to any level or any area of the country. Almost every project is conceived because it offers opportunities for certain people to make money. A great deal of the ANC’s problems are occasioned by this.”

In spite of Motlanthe’s candid remarks, he has himself been drawn into the fray over who gets what business opportunity. He has been closely associated with ‘Oilgate” company Imvume, which has benefited from a number of government opportunities — most infamously a state oil sector contract from which it diverted R11-million to ANC coffers before the 2004 elections.

Motlanthe also appears to have played a role in the Kalahari manganese deal. He allegedly attempted to convince Vekselberg’s associates in 2004 that the oligarch should team up with empowerment company Kalahari Resources, rather than with Chancellor House.

Kalahari Resources was co-owned by, among others, a close struggle comrade of Motlanthe’s and an Imvume sister company.

The FM assertion that Motlanthe was unaware until late last year that Chancellor House is an ANC vehicle may explain why he might have been willing to argue against its interests.

But it does not relieve him of meddling in a selection process that should have been conducted at arm’s length from ANC structures.