The politics of money in SA

In April 2010, Jabulani Sikhakhane, an eminently sensible commentator for Business Day, set out a rather astonishing proposition.

In his column, he wrote that South Africans should not be dismayed at the prospect of the ruling African National Congress making up to R1-billion in profit from a contract to build a new coal-fired power station for the state-owned electricity utility, Eskom.

The profit would flow from a 25% shareholding in Hitachi Power Africa, which won the tender to supply the boiler sets for two new Eskom stations. The share is held by a company called Chancellor House, which the party has acknowledged is an ANC investment vehicle.

Critics have labelled the very notion of the ANC profiting from doing business with the state which its government leads as “corruption on a grand scale”, to quote Helen Zille, the leader of the Democratic Alliance.

Sikhakhane is sympathetic to Zille’s concerns, yet he labels the Chancellor House deal as a “lesser evil” than the status quo, in which, as he puts it, “the ANC gets the lion’s share of the funding because it, through the deployment of cadres in senior government positions, controls access to government contracts”.

Party funding vehicle
Chancellor House Holdings, registered in 2003, appears to have been an attempt to establish a more structured vehicle for party funding.

But the ANC’s beneficial interest in Eskom’s programme emerged as a major public issue only in 2010 when it became clear Eskom would require massive tariff hikes to fund its capital projects. The ANC’s conflict of interest — it formally opposed the tariff hikes but stood to benefit from them through Chancellor House — became a matter of national debate.

Zwelinzima Vavi, the general secretary of the Congress of South African Trade Unions, expressed rhetorical disbelief that the ANC had put itself in such a position.
He noted: “The problem with this is that the ANC will not be able to ward off genuine concerns that it might have decided to accept the extraordinarily high tariffs imposed on the poor and industry because it stands to benefit. If it is true that the ANC company has invested in Eskom, then God help us all.”

But the political complexity thrown up by party business interests was highlighted by the response of ANC secretary general Gwede Mantashe, who is also the chairman of the South Africa Communist Party and a close ally of Vavi, against the nationalist-populist wing of the ANC. At an ANC-Cosatu bilateral meeting, Mantashe launched a blistering counter-attack, accusing Cosatu of taking part in a “malicious debate” and adopting “a populist stance”.

Beneath the internal tactical manoeuvring that may also inform Mantashe’s defence of Chancellor House lies the same ethical quandary expressed by Sikhakhane: the view that the Chancellor House model represents the lesser of two evils.

Like Sikhakhane, Mantashe apparently believes that it would be better for the party to monopolise this power, as opposed to the free-for-all that currently exists.

[But] the genie is already out of the bottle in the sense that the idea of political power and material accumulation as a sweet and natural cycle has been propagated throughout our political system. In an August 2009 article in the journal, ANC Today, Mantashe wrote: “The biggest threat to our movement is the intersection between business interests and the holding of public office. It is frightening to observe the speed with which the election to a position is seen to be the creation of an opportunity for wealth accumulation.”

But when Cosatu began to press for lifestyle audits for ministers and senior officials and to demand that those in government not merely declare but divest themselves of their business interests, the ANC put on the brakes.
At the same bilateral meeting the ANC accused Cosatu of trying to create the impression that the ANC was inherently corrupt and anti-worker: “Our observation is that sometimes the federation joins the chorus of accusing individual comrades of corruption too easily without even taking the trouble of validating the accusations — This is understandable when the opposition does it, but is incomprehensible when an ally advocates it.”

The message is clear: loyalty comes before probity. Mantashe’s prescription for dealing with the problem of corruption is to reach for the same quasi-authoritarian instruments Mbeki tried and failed to impose.

In an address to a municipal workers’ congress in November 2009, Mantashe argued that greater party discipline was the key to dealing with these corrupt tendencies. “There is nothing wrong with deployment as a policy. What is wrong is the abuse of that policy wherein it is used to offer jobs to pals.” Clearly, the ANC will not confront the possibility that cadre deployment per se leads to abuse through the inbuilt conflict of interest it creates.

Left-wing critique
That wilful blindness also characterises the failure of most of the ANC-Cosatu-SACP alliance to confront the consequences of what is termed “the 1996 class project”. This term represents a left-wing critique of the Mbeki presidency, which emerged rather late in Mbeki’s time at the helm of the party — about 2006 — when the damage had been long done.

Mbeki’s initiation of his own programme, Gear, as a substitute for the RDP, coincided with his battle to succeed Nelson Mandela as ANC president. The aspirant black elite were his natural class allies and the racial-populist nature of the “transformation” programme he held out to them fitted well with his own racial super-sensitivities. So, broad redistribution, through the tax system and the proper funding, staffing and functioning of core departments of state (in education, health and local government), took a back seat to black economic empowerment and cadre deployment.

What Mbeki assessed correctly — and his critics have still failed to understand — was what a powerfully seductive mix this was. BEE offered virtually instant gratification to the newly empowered political elite at every level: the promise of millions (at one end of the scale) or a house and a flashy car (at the other end) within months, rather than the years or decades of effort demanded by broader programmes of national reconstruction. For those on the outside of this narrow redistribution, BEE offered at least a clear aspirational goal and a chance, even vicariously, to upset the order of racial privilege of the past.

BEE offers a simple and coherent ideological message with which the liberation movement’s left wing has not even begun to compete: “It’s our turn”. It is BEE that has provided a vehicle and a respectable justification for the injection of money deep into our politics. Until the alliance recognises and confronts that reality — confronts its own addiction to short-term gratification — the prospect for a cure will remain remote.

Paying for Politics: Party Funding and Political Change in South Africa and the Global South is edited by Anthony Butler and published by Jacana.

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