Purse-string wars

ANC treasurer general Mendi Msimang and the trustees of the ANC-linked Batho Batho Trust are at logger­heads over who decides how trust money should be spent. The origin of the disagreement is Msimang’s belief that the proceeds from a lucrative sale of trust shares last year should be used to pay off the ANC’s massive debts.

The business deal involves investment company Thebe Investment Corporation and the Batho Batho Trust, the majority shareholder in Thebe Investment.

The Batho Batho Trust was founded in 1992 by ANC veterans Walter Sisulu, Nelson Mandela, Beyers Naudé and Thomas Nkobi, among others. The unwritten, but widely accepted, mandate of the trust was to finance the ANC once the external funding it relied on during exile dried up when it took power.

According to the Thebe website, the official mandate of the trust is to benefit ‘the broader South African community, especially historically disadvantaged communities, [including] community-based organisations, educational institutions, charity bodies and any other bodies, companies, trusts or organisations”.

It is this mandate that the current trustees subscribe to, said Batho Batho Trust chairperson Molefe Tsele, and which has led to tensions with Msimang. He appears to hold the view that, because the ANC provided the funding for the formation of Batho Batho, and ultimately Thebe, the party should have discretion over the funds it generates.

‘The TG’s [treasurer general] idea about the purpose of the trust is different to ours,” said Tsele. ‘He may think he controls the trust, but we’re of a different view.”

At the time the trust was formed, it provided the financing to establish Thebe Investment Corporation and remained the sole shareholder until the late 1990s, when it diluted its stake to 74%, selling 26% to Absa and Sanlam.

At the end of last year, Batho Batho sold another 22% of its shareholding in Thebe back to company management for a staff ownership scheme. It is unclear how much the shares were sold for but, based on the company’s annual revenue, about R650million, the Mail & Guardian believes they were worth upwards of R100million.

If party sources are to be believed, the ANC’s debt currently also stands at about R100-million. In an interview with Msimang last year, when the deal to sell the Batho Batho shares to Thebe management had not yet taken place, he referred to the trust as the property of the ANC and confirmed the pending deal.

‘The money is still coming,” he said. ‘We had to sell because we had other responsibilities; among other things, we had to pay off debt.”

But while the Batho Batho trustees acknowledge that the ANC is an on­going beneficiary of the trust, they say they refuse to manage the trust according to the will of the ANC treasury. The trustees appear particularly reluctant to spend the proceeds of the trust on financing the ANC’s debt. ‘When our term as trustees ends, the new trustees may decided to manage it differently,” said Tsele.

The Batho Batho trustees recently held a meeting with Msimang to ‘try and resolve the mandate” of the trust. Msimang was told that he should respect ‘trustee fiduciary” duty.

‘The TG’s understanding of the trust is creating frustrations for the trustees,” said Tsele. ‘He automatically assumes that the money the trust generates is for the ANC because Batho Batho originated from the party’s leadership.”

When asked if he could confirm that none of the money from the sale of the shares had been used to finance the ANC’s debt, Molefe said, ‘I wouldn’t make it as categoric as that, but the Batho Batho Trust has nothing to do with what the TG has in mind.”

This week, Msimang was terse. ‘It’s an old story and I’m not obliged to comment.” It is well documented that the ANC is cash-strapped. The party’s salary bill — estimated to be about R5million a month, according to a recent article in the Financial Mail — is its biggest overhead cost.

The party employs 364 permanent staff: 80 at Luthuli House in Johannesburg, 72 at provincial level and four staff in each of the 53 regional offices. ANC officials are paid salaries that are commensurate with their contemporaries in government; provincial secretaries would, for example, be paid similar salaries to members of the provincial executives (about R500 000 per year) and branch officials would be paid salaries on a par with municipal managers (about R300 000 per year). Top Luthuli House officials are supposedly paid salaries similar to those of government ministers (about R850 000 a year).

Msimang said last year that the annual public instalment from the Independent Electoral Commission to the ANC — about R49million — constitutes about 10% of the party’s total annual funding needs. Membership fees constitute less than 1% of the party’s total funds, he said. This means that the party has to source up to 89% of its funding from outside sources.

But Molefe is adamant that the ANC treasury has ‘no powers” over the trust and that ANC requests for funding will be adjudicated like those of any other organisation that apply for funding.

The Batho Batho trustees are former minister of environmental affairs and tourism Valli Moosa, businessperson Sbongiseni Dhlomo and former ANC Jo’burg chairperson Kenny Fihla, who was elected as a trustee last year.

On Monday, the Batho Batho Trust will meet to confirm acceptance of a 2,4% stake in Capitec Bank through a BEE deal. Capitec has increased its black shareholding from 4% to 16,04%, selling stocks to a consortium of BEE beneficiaries. Batho Batho holds 20% of the consortium.

According to Molefe, the trust is pursuing this deal independently, not on behalf of Thebe. ‘I don’t even know if Thebe is aware of this deal,” he said.