ANC+finance,+untold+millions,+Carol+Paton,+Financial+Mail

Financial Mail, Johannesburg, 19 January 2007
=FINANCING THE ANC= =//Untold millions//=


 * By Carol Paton**


 * Imagine a company with a board that hasn't seen financial figures for years, where no audited set of financial statements have been produced for a decade, and the CEO isn't sure where the monthly cash flow is coming from, yet the costs are huge.**


 * That picture looks** remarkably like the ANC now.


 * Businessman and ANC national** executive committee member Saki Macozoma says he can't remember the last time a financial report was given to the NEC. It is almost 10 years since a full financial report was presented to the ANC national conference - an event roughly analogous to an annual general meeting, when representatives of the full ANC membership meet, albeit only every five years.

According to the ANC constitution, the organisation's finance committee (a sub committee of the NEC) should report the status of the party's finances twice a year, while the treasurer-general should provide full financial statements to the national conference. At the ANC's last such conference, held in Stellenbosch in 2002, Mendi Msimang, the party's treasurer-general, "put a few slides up on a screen", say some delegates who were there, but no audited statements were presented.

As a political party, there are almost no legal requirements - other than its own constitution - governing financial disclosure (the main difference to the company analogy). Though it needs to provide an account to the Independent Electoral Commission (IEC) and parliament of the money it gets from those bodies each year, there is absolutely no obligation on the ANC, or any other political party, to account to any oversight agency or to the public. A separate account is kept for money from the IEC and parliament, accounted for alone.


 * The rest of the ANC's finances** are so mysterious that even secretary-general Kgalema Motlanthe - the organisational head of the party's operations - seems to be in the dark about much of them. For example, the first Motlanthe heard of ANC front company Chancellor House - exposed by the //Mail & Guardian// last year - was when he was phoned by the newspaper days before publication. (Chancellor House operates in the highly regulated mining sector and has been alleged to raise money for the party through black empowerment contracts.)

In such a vacuum of oversight, anything could be happening in the books of the ANC. Legal requirement or not, managing the party without any figures is like managing a company without any figures - shambolic and impossible to be confident you aren't being defrauded.

And the ANC is cash-hungry. Its monthly salary bill is in the region of R5m, which includes the salaries of the staff employed in 53 regional offices, nine provincial offices and the head office. Salaries at senior level are benchmarked against those in government: top officials can earn between R600 000 and R800 000/ year. Then there are untold costs for premises, supplies, benefits, transport, and so on. Such costs are comparable to running a fairly large company and must run into the tens of millions. And that's before the costs of running campaigns.

But the ANC gets only R49m/year from the IEC, which arrives in quarterly instalments. The party also gets money from parliament - around R100m this year - but presently none of this is used for ANC office overheads. The parliamentary grant is spent strictly on ANC parliamentary constituency offices and other costs at parliament.

The huge cost structures of the ANC, says Macozoma, inevitably lead it into "all kinds of adventurism".


 * The list of such adventures is mounting.** One is the "Oilgate" scandal. A company, Imvume Management, donated R11m of taxpayers' money to the ANC in December 2003. Imvume got the money from parastatal PetroSA, for which it had played the middleman in procuring a shipment of oil condensate from the Iraqi government. PetroSA paid a R15m advance, R11m of which then found its way directly into ANC coffers.

What has not been reported is that Imvume made the controversial donation at a point when the ANC was in a deep financial crisis.

The salary bill - then around R7m /month - had not been paid for six weeks. When the Imvume payment came through, just before Christmas, it was instantly swallowed to pay salaries for the last two months of the year. "The Imvume money paid our salaries. Everybody thought that it was for the ANC's election campaign, but R12m would never have come near to covering a fraction of our campaign costs," says a staffer who spoke to the //FM// on condition of anonymity.

Chancellor House is another potential blight. Motlanthe describes it as "an ANC vehicle" that exists for the sole purpose of funding the ANC. But no official reports about Chancellor House have ever been given to the NEC.

Another potential business source for party funds is Thebe Investments. The respected empowerment firm has a wide range of investments.

It in turn is majority-owned by the Batho Batho trust, established by Nelson Mandela in the mid-1990s as the party's investment arm. But to date, the party, via the trust, has not received any significant funds.

A new chairman of the trust - former Johannesburg ANC chairman Kenny Fihla - could change that. The //FM// believes Fihla has been appointed to rectify the situation and ensure the trust delivers for the party.


 * Fundraising is another source of cash** for the party. But the ANC's efforts in this regard are often amateurish - mostly knocking on doors at the end of the month.

Says Macozoma: "One expects a call at the end of the month... and when they do get the money, the best thing to do is hold your nose."

Fundraising is mostly directed at campaigns. An election campaign costs around R100m, a figure the ANC must raise twice in five years - once for national and provincial elections, and again for local elections. This excludes what regions and provinces must raise for themselves.

When challenged by the Institute for Democracy in SA (Idasa), a lobby group, to open its books to public scrutiny, the ANC (and all other parties except the African Christian Democratic Party) refused. But the dangers of secrecy have been amply illustrated. Part of the deal between Imvume, the ANC and the Iraqis, according to the //Mail & Guardian//, was political support for Saddam Hussein.

The ANC is not alone with problems caused by being seen to use influence to raise funds. Former officials of the now defunct New National Party, David Malatsi and Peter Marais (former Western Cape premier), were charged with accepting a R100 000 donation for the NNP from Italian tycoon Riccardo Agusta in 2002. In return they were meant to lubricate provincial approval of Agusta's proposed golf estate outside Plettenberg Bay. Though Marais was acquitted, Malatsi was found guilty and sentenced to five years in prison.

With so much pressure to raise cash, the ANC abuse of the party's power and influence seems almost inevitable. Again, it is not alone. Donations made to parties are common the world over. It is almost impossible for outsiders to know when those donations have been made in exchange for favourable treatment by some organ of the state.


 * From: http://secure.financialmail.co.za/07/0119/cover/coverstoryd.htm**

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