/ 24 February 2008

Chancellor House deals probed by ANC

The newly elected African National Congress (ANC) leadership has ordered a forensic audit of all empowerment deals and tenders that were received by its investment company, Chancellor House, the Sunday Times reported on Sunday.

“The investigation is expected to look into the roles played by President Thabo Mbeki; his deputy, Phumzile Mlambo-Ngcuka; and former ANC treasurer general Mendi Msimang,” the newspaper said.

Current ANC treasurer general Mathews Phosa said the audit was designed to establish the exact value of the deals as well as to ascertain whether there were any conflicts of interest.

He told the newspaper that criminal investigations might follow if anything untoward was uncovered. “The law will have to take its course.”

Earlier this month, the Mail & Guardian reported that — in an about-turn signalling a fresh approach to party funding by the ANC’s new leadership — Chancellor House would exit two multibillion-rand contracts with Eskom, the state electricity company.

The ANC company’s stake in the contracts to build boilers for two new Eskom power stations was worth an estimated R5,8-billion — a controversial situation because the party stood to gain from contracts awarded by an organ of the state it controlled.

Chancellor House MD Mamatho Netsianda confirmed at the time that the company intended to release a statement, but would not say when. “We are running a company. We’ll do it when the time is right; when it is appropriate.”

Phosa, however, confirmed the intended exit and said it would be “immediate”.

Chancellor House held its stake in the contracts through a 25% shareholding in engineering company Hitachi Power Africa, part of a consortium that won the Eskom contracts late last year.

Phosa said the decision was based on ethical considerations. “Corporate governance and good business practices are binding on all citizens of this country. No one is above this … This is the message we want to bring across.”

He said he had advised Chancellor House to get out of the Eskom deals, as well as others that might present a conflict of interest. “I had to consult broadly. I didn’t bully anyone and I think everyone agreed.”

Investment revealed

The Chancellor group has investments as diverse as minerals and energy, defence and logistics. A number of these depend on state procurement or the granting of rights by the government. A manganese prospecting right held by United Manganese of Kalahari, co-owned by Chancellor, was recently converted to a full mining right.

The M&G and the Institute for Security Studies corruption and governance programme exposed Chancellor as an “ANC business front” in 2006. The M&G recently revealed Chancellor’s part in the Eskom contracts.

Phosa’s intervention suggests a break with the approach of the ANC treasury under his predecessor, Mendi Msimang, whose term was marked by scandals such as Oilgate and allegations that the party benefited from the arms deal.

Phosa’s approach was foreshadowed by ANC deputy president Kgalema Motlanthe, who reportedly said after the M&G‘s initial exposé: “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.”

The ANC’s Polokwane national conference in December passed a resolution motivating “an effective regulatory architecture for private funding of political parties and civil society groups to enhance accountability and transparency to the citizenry”. It mandated the party’s leadership to “urgently develop guidelines and policy on public and private funding, including how to regulate investment vehicles”.