ANC AND BUSINESS: SOUL FOR SALE

The African National Congress has traded ideals for influence as the party is corrupted by its members' lust for financial gain. The Financial Mail tracks the rot at the heart of SA's most powerful organisation.

It was a cool spring evening when an ambulance screeched to a halt outside the ANC's provincial office in Dutoitspan Road, Kimberley. Paramedics were rushing to the aid of the city's first citizen, mayor Patrick Lenyibi, who had been hit by flying teacups thrown during a brawl in the ANC offices.

The first cup hit him on the head. The handle of a second lodged itself deep behind the ear after being smashed onto his head with greater force by a senior ANC member.

WHAT IT MEANS
Bending the rules has become a culture
The politics of the ANC has become distorted

From several accounts, the fight, which took place in late 2005, was over a tender to supply coupons for pre paid electricity meters. The mayor is said to have implied that it would go to a group of ANC women, the member's mother included, who had already arranged to be trained to run the enterprise. But instead the tender was advertised, as it should have been, with conditions that cut his mother out of the running.

The blows were exchanged in the office of provincial secretary Neville Mompati, who strenuously denies that the argument was over a tender. Decisions over tenders should be made by neither the mayor nor the ANC but, according to the Municipal Finance Management Act, by officials in the city's tender committee. However, theory and practice are far apart.

Fights over who should get what contract are happening with growing frequency countrywide. It is a matter of embarrassment to the ANC, a party many members proudly think of in terms of its struggle legacy. That legacy is now being severely undermined, and the party seems paralysed.

The ANC, as the party in government, is centrally involved in dishing out tenders and contracts. The introduction of commercial interests is one factor that is undermining its proud political footing. Another is the "deployment" of ANC comrades to business.

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 SA 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's a transformation that wasn't expected. Rather than "transforming the state", as the party describes its goals in official rhetoric, the economy has transformed the ANC.

How did it begin? Trouble started for the ANC almost as soon as it took power, with squabbles over control of provincial structures. But it was only when politicians moved into the world of business that the competition for commercial opportunities began to dominate ANC dynamics.

ANC national leaders, with their clear accomplishments and talents, provided a ready recruiting ground for white business, wanting to deracialise their leadership and management and, to a lesser extent, their ownership. In many cases, senior ANC members did not detach from the party in order to take advantage of such opportunities. Today, most of the senior leadership at the ANC's Luthuli House headquarters are involved in business (one of the exceptions is ANC secretary-general Kgalema Motlanthe). As a result, few are ever there to do party work.

In parliament, 40% of ANC MPS are directors of companies, many owning them outright. Such interests are often in construction and mining. The ANC national executive has several ultra-rich members involved in business or, in the case of several cabinet ministers, whose spouses are business high-flyers.

At the ANC's last national conference five years ago, black economic empowerment (BEE) became ANC policy and engaging in business, to transform the economy, won official recognition as an acceptable revolutionary activity.

Quickly, ANC activists at provincial and local level followed the examples of their national leaders and headed into business.

On a macro level, looking at the redistribution of wealth and opportunities and the growth of black business and ownership, progress has been slow but positive. But the grassroots picture is not a such a pretty one.

Kimberley, for example, is a small city where, after mining, government business is the best game in town. The teacup meeting was not unusual: since 1999, when ANC comrades were first deployed in business, the awarding of tenders has been controversial.

Many ordinary members in the ANC say they got the impression from the start that who got what tender was being brazenly staged by their political seniors. At least two senior public servants left their jobs and landed lucrative outsourcing tenders in a matter of weeks, after being "deployed" to business, activists tell the FM, by the top structures of the party.

Soon a handful of ANC-aligned businesspeople were winning contract after contract - whether in security, transport or construction. A minor revolt in the party ended in defeat, when a group of rebels from the Kimberley region tabled a resolution at the party's 2001 conference, arguing that BEE should be broad-based and not favour just a selected few.

In the Kimberley example, three businessmen stand out as having been particularly successful in winning contracts: Motsamai Rantho, Tshego Motaung and Tyron Ruiters. Rantho and Motaung are former civil servants. All three have at some point been business partners with ANC chairman John Block.

Both Motaung and Rantho got their first contracts from Block's department, while he was transport, roads & public works MEC. Motaung, who once worked for Block, won part of a contract to manage the government garage - an enterprise for which Motaung himself had written the specifications before leaving the department to win the tender.

Like almost all "emerging" businessmen, contractors in Kimberley donate handsomely to the ANC - sometimes far more handsomely than they would like. One contractor who was asked for a R20 000 donation paid up willingly, he told the FM, but could not afford a second request for more than 10 times that amount. Such donations are common (see "Untold Millions").

John Block - Good contact to have

Block, it was widely reported, was forced to step down as an MEC in 2003 for splurging public money on hotels and entertainment for himself, his wife and friends, including a trip to Cape Town's jazz festival. In a criminal trial he was acquitted - despite having admitted on television that he did it because he was a "jazz maniac" and hoped that the nation would forgive him.

But the days when the Northern Cape's ANC leadership harmoniously discussed placing comrades in business are over. Both the chairman, Block, and the secretary, Mompati, are in business for themselves, alliances are constantly shifting as business deals succeed or fail and though Mompati strongly denies any tension, trust in the ANC is in short supply.

"In the Northern Cape," says an ANC member fed up with corruption and the fight for contracts, "we no longer have an ANC leadership. We have an ANC dealership."

Behaviour like that in Kimberley is a real problem for the party. Motlanthe, as national secretary-general, has been inundated with complaints from all over, particularly about unfair monopolisation of business opportunities. An endless stream of people have come to his door complaining. Some say they have been betrayed by the ANC, cheated out of tenders or told to cut the friends of certain politicians into their deals. Sometimes ANC colleagues shop one another when they fall out - as when North West premier Edna Molewa reported then Women's League secretary Yvonne Makume to the ANC head office. An ANC official says Makume had written to municipal managers, telling them to dispense with some tender regulations when it came to evaluating her company's bids.

There is no scientific measure of how bad corruption in SA really is. Organisations like Transparency International measure corruption on the basis of perceptions through interviews. SA comes out reasonably well, rated the second-least corrupt country in Africa. This might reflect the macro picture of SA's big corporates and government departments. But it is certainly a radical underestimation of what is happening at a micro level in provinces and municipalities.

Motlanthe, in touch with the ANC's nearly 200 branches, has a better view than most. He believes corruption is far worse than anyone imagines.

"This 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. There are people who want to take it over so they can arrange for the appointment of those who will allow them possibilities for future accumulation," he says.

Members the FM interviewed implied that sending contracts the way of an ANC-linked businessman was frequently legitimised by the notion that doing so was "good for the ANC". Often, it is claimed, the profit will be for the ANC itself - a statement, says Motlanthe, that is far more often false than true.

Direct donations to the ANC are frequently solicited, sources say. Contractors are also known not just to donate to the party generally but also to bankroll particular factions or individuals, well placed to dispense large contracts.

Bending the rules, says Motlanthe, becomes a culture when people lower down see that higher-ups do it.

The ANC and its structures are the first stop for anyone hoping to make money out of government contracts. And the party is highly vulnerable to manipulation by those looking to gain influence.

Corrupting the ANC is not an expensive business. Membership costs R12/year and the practice of buying members to support an individual in a branch or provincial conference election is common. ANC membership rises and sometimes even doubles in the lead-up to a provincial conference (see graphs).

Procedures put in place to confound ghost members had been subverted, Motlanthe said in an official report in July 2005, and people had been able to "capture branches" and "advance self-serving agendas".

One local councillor - a community worker of excellent standing who lost his seat on the Emfuleni city council (Vereeniging) when his branch failed to nominate him in 2005 - told the FM the branch nomination process was "mad".

"Almost everybody was pushing to get in [as a councillor]. I saw a lot of people I didn't know. These people had just been given membership - they had not been in the organisation at any point before."

The impact on the party is clear. Businessman Saki Macozoma says he is deeply concerned about how "the expectation of making money out of government distorts the politics of the ANC".

"People who have no interest in advancing the politics of the ANC have stormed in and taken over. Once inside, they displace others - and competence goes out of the window," he says.

Access to provincial cabinet positions now carry an additional significance. The highest prize are those with capital budgets to spend: housing, public works, roads and transport.

To see how access to such power is distorting the way the party should work, consider another example.

Mcebisi Skwatsha - Deployed

Mcebisi Skwatsha is the popular secretary of the Western Cape ANC - a position he has held for two terms. Though things have changed now, for many years Skwatsha was one of only a few African members of the ANC on the provincial executive. But though Skwatsha was close to Ebrahim Rasool, the ANC leader before 2005 and the premier since 2004, he wasn't automatically considered by Rasool for appointment to his cabinet.

Ebrahim Rasool - Faction fighting in the Western Cape

When Rasool put his cabinet together in April 2004, he was lobbied to include Skwatsha by the ANC's national structures. He was given the coveted transport & public works portfolio, which allows him to oversee the valuable property interests of the province, complete with a substantial capital budget.

The party was trying to solve another problem. It had become concerned by complaints of a monopoly on economic opportunities by a small group of businessmen in the Western Cape (see case study, "Ethnic wrangling").

But not long into his term, Skwatsha's responsibilities were summarily re organised by Rasool, who took the management of government's property assets away from Skwatsha and reallocated them to his office.

The FM has been told that Skwatsha was negotiating with businessman Brett Kebble over the disposal of the provincial government's most precious jewel, the Somerset Hospital site, situated near the Waterfront complex and ripe for a multi billion-rand development. Those negotiations have been confirmed by an associate of Skwatsha's.

The result of the reorganisation was outrage and pandemonium in the ANC. Skwatsha parted ways with Rasool and teamed up with the "Africanist" faction that both had previously disdained. The provincial conference (during which the Skwatsha faction, according to a well-placed source, had its pre conference caucus meeting in a Seapoint hotel bankrolled by Kebble) saw Rasool stripped of much power. He lost his position as chairman and only barely held on to an ordinary seat on the provincial executive.

According to sources in the Skwatsha camp, Rasool had one more stab at Skwatsha before losing his position. Two weeks before the provincial conference, Skwatsha was hit by corruption allegations, accused of trying to get a security tender from the city council for his brother's company by using his political influence.

Rasool, says a member of the ANC provincial executive, admitted afterwards that he had met the investigating officer twice - which may explain why the police raiding the city's tender offices said in an affidavit that they were doing so on the orders of the premier.

Cleared over a year later of any wrong doing by the elite Scorpions unit, the ebullient Skwatsha cracked open a bottle of champagne at a press conference late last year.

"The champagne was not just because there was no case against him, but because Rasool had used state resources against him and failed," says a friend.

The broedertwis in the Western Cape ANC shows how the arrival of business opportunities has changed political life.

SA Communist Party leader and intellectual Jeremy Cronin says that the ideology of the ANC has shifted. While the general thinking used to reflect an organisational and collective approach to change, nowadays the emphasis is an individualistic one, a prevailing notion that "you can get whatever you want, if you want it badly enough".

Saki Macozoma - The ANC is being distorted to make money

Motlanthe and Macozoma both speak of the rise of the "Lotto mentality" and how the idea that it is possible to become an instant millionaire has taken root. Working for low wages or low returns in a small-scale enterprise is scorned.

"People see that others are making reported millions - even though it's actually all debt. Ordinary ANC members ask themselves why not me?'," says Macozoma.

So can the ANC get its house in order? For more than 18 months the party has been paralysed by leadership succession. Little else has been discussed at the NEC, the most senior committee of the party, despite a general recognition from across the board that the ANC is rotting from within.

A sub committee of the NEC, made up of Macozoma, finance minister Trevor Manuel and others, was recently asked to produce guidelines on how the ANC should deal with the problems arising from its members' dealings in business.

This was after Motlanthe rang alarm bells more than 18 months ago at the ANC's national general council, where he warned that the involvement of members in business was destroying the soul of the party.

Expedient membership of the ANC

Some of the group's suggestions include: declarations of interest for ANC officials; guidelines on what kind of donations the ANC should accept; and the suggestion that a special committee elected at the party's five-yearly national conference deal with disputes between members.

Solutions, though, are constrained heavily by two things.

The history of political and economic dispossession makes it unlikely that anyone, politician or high-ranking civil servant or not, will be excluded from the exceptional opportunities that BEE provides for wealth accumulation.

"You've got to be reasonable and pragmatic about this. Cooling-off periods [where ex-government officials are restricted from participating in the sectors they have regulated] won't work for our generation. Where a person has built up skills and knowledge in an area, you can't tell them they can't participate," says Macozoma.

Neither is excluding serving politicians from participation in business a realistic option, he says. "BEE creates a particular opportunity with a limited shelf life - you can't exclude people from it."

But more immediately, the ANC is constrained most heavily in finding a solution by its own organisational paralysis. Obsessed with its leadership battle, the party has been rendered incapable of honest self-reflection at a time when it is faced with challenges that can bring about its own destruction. It is crucial for the party to reflect on its own systems and processes. The ANC national conference, at the end of this year, must choose the future leader of the party. But it may be more important to decide the future of the party itself.

Motlanthe's words in reference to the Western Cape can be applied to the party as a whole: "I told them that they have no ideological differences; they have no racial differences. They are fighting over control and monopoly of tender processes."
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Violent Attacks, Criminals' Lack of Fear Among SA's Challenges

Business Day February 2, 2007
THE Institute for Security Studies says the violent nature of aggravated robbery in SA, and the obvious lack of fear of being caught by culprits who pick times when the public is likely to be around, are among the country's most serious crime challenges.

Institute researcher Antoinette Louw said yesterday the public perception that crime was out of control could be linked to the violent nature of crime and lack of communication by the police. This was made worse by the public having to wait a year-and-a-half for crime statistics.

While crime incidence is 7% higher than it was 12 years ago, there has been a steady decrease over the past three years in most categories. Louw, who has been monitoring the statistics for years, sees this as positive. But the rate of robbery, said Louw, was significantly higher than it was 12 years ago, with common robbery increasing 89% and aggravated robbery by 16% between 1994-95 and 2005-06.

Most robbery-type crimes had decreased over the past three years, with the exception of car theft and cash-in-transit heists.

"The response of police leaders has left the public with the sense that government, and the police in particular, don't care enough about the problem of crime or its consequences," she said.

"What would help is a sincere and informed acknowledgement of the problems, followed by a clear outline of how these will be dealt with in various parts of the country."

Louw said Safety and Security Minister Charles Nqakula's remark last June, that people who "whinge" about crime should leave the country, had not helped.

It had not reduced public fears that robberies at shopping malls, banks and homes often targeted people. The threat of rape and murder and that these crimes were generally committed by large groups tends to fuel public fears.

After peaking in 2001-02 at 15846, reported robberies declined steadily, reaching 12434 in 2004-05. In the past financial year, robberies increased 3%.

Car theft was up 2,5% on 2004-05. Louw attributed this to an increase in the number of registered vehicles and the fact that organised crime was generally rising. The 74% increase in cash-in- transit heists between 2004-05 and 2005-06 was seen as a matter of concern.

Factors were more cash in circulation, inadequate cash management, the absence of minimum standards for vehicles, training and vetting among companies that moved cash, and guards generally being outnumbered by criminals during attacks.

A decrease in bank robberies because of banks stepping up security could also be a factor.

Louw said promises by the police that the next set of crime statistics would be released in early May, rather than in September, were encouraging and would reduce speculation about crime.

"Of the information that has been provided to the public it's encouraging to know that organised crime has been identified as a priority and that intelligence capacity and border control will be improved, although we know little about the precise restructuring of the police service." It was also seen as encouraging that Nqakula had hired the Centre for the Study of Violence and Reconciliation to help police in understanding violence.

Research by Robert Mattes of the Centre for Social Science Research found that while SA police were often better resourced than their African neighbours, the perception of its performance ranked among the lowest on the continent.

He said this suggested that "throwing more money" at the police or employing more people would not reduce crime. What was needed was a more community-orientated police service.
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How FNB Was Forced to Drop Mbeki Campaign

Business Day February 5, 2007
BIG business in SA is often pilloried by the left for holding government policies to ransom. Late last week, though, the men who run the country's biggest companies discovered the true limits of their ability to influence politics.

While it may be a political turning point in this country, it was not a pretty sight.

For two weeks First National Bank (FNB) had carefully planned an audacious campaign, backed by its own money, to try to convince an apparently unbelieving President Thabo Mbeki how anxious citizens really are about violent crime. They would print 1,5- million large posters, each containing a letter to Mbeki and a postage-paid envelope, begging him to do something about their security, letters that were to have been inserted into newspapers yesterday and today. The cost? More than R10m. Yet, at the eleventh hour on Friday, FNB pulled the campaign, with the posters and letters printed and virtually in the delivery trucks.

FirstRand CEO Paul Harris has magnanimously said he will shoulder the blame for the mess (what to do with 1,5- million posters, for a start?) but to his credit, he has studiously avoided talking of the intense political pressure that was put on his bank and which ultimately convinced him to scrap the campaign; the startling point is that this pressure came largely from his own constituency, big business.

Of course, there was also political pressure. It is now understood, for example, that a delegation of senior ANC leaders, apparently led by Safety and Security Minister Charles Nqakula and accompanied by Business Against Crime officials, visited FirstRand's head office on Friday to get them to pull the campaign -- although this could not be confirmed.

But what has since leaked into our possession is a series of letters in which it becomes clear that leaders of the country's top business organisation, Business Leadership SA (BLSA, formerly the SA Foundation) went out of their way to distance themselves from FNB's efforts and to isolate Harris.

BLSA members are the cream of SA business. Its board includes Cyril Ramaphosa, Saki Macozoma, Steve Booysen, Jacko Maree and Derek Cooper. Cooper is chairman of BLSA as well as chairman of Standard Bank. Anglo American's former political strategist, Michael Spicer, is CEO. BLSA is not to be trifled with.

Someone forgot to tell that, though, to Johann Rupert, who laid into Spicer in a letter (printed on our front page) and laid bare obvious differences of opinion in BLSA about how to talk to government.

Rupert was responding to a letter written by Spicer on behalf of BLSA and President Thabo Mbeki's Big Business Working Group, which is co-ordinated from the BLSA offices in Parktown, Johannesburg. Spicer had sent a note to his members saying that the "core group of leadership" had "deeply questioned the wisdom of the FNB initiative". Spicer's note, part of a flurry of correspondence and meetings in the last few days of last week, was sent to more than 30 top executives of blue chip companies, including the JSE, Anglo American, Gold Fields, Old Mutual, Murray & Roberts, Nedbank and SABMiller. Spicer said the "core group" tried to persuade FNB to "alter course" to no avail, and spoke of preserving "the relationship of trust built with government" and the leadership of Business Against Crime.

Cooper, meanwhile, had called Safety and Security Minister Charles Nqakula after hearing of the FNB plans. He also spoke to the Presidency. Both Spicer and Cooper were determined to impress upon government that the FNB campaign was FNB's alone. This seems to have angered Rupert. In his reply to Spicer, Rupert tells Spicer that since the Business Against Crime group met Mbeki in August, "we have heard nothing of substance (but) during this period a number of friends/acquantances/colleagues have been murdered, violated and robbed".

Rupert says Remgro would deliberately not follow BLSA's path of non-confrontation, and "it can be expec-ted that Remgro will back the FNB campaign, both as a loyal South African corporate citizen and as a key shareholder (of RMB)".

"During the apartheid days, business was continually confronted with similar problems, and many people and companies chose not to speak up. This included the then 'core group of leadership'," he wrote.

He said that speaking up about things that are "patently wrong in a society is not disloyal -- it is the moral right and duty of any citizen".

Spicer yesterday defended his position, saying he told FNB he could not support the campaign, as his organisation was actively working with government to improve the criminal justice system.

He said FNB was free to go ahead with its campaign but would be "responsible for its own actions".

This implies that FNB had much to lose. On Friday, Harris said the campaign was cancelled after "various discussions" that highlighted potentially negative consequences of the campaign. He said the "possible outcomes might not have matched the intentions of the campaign".

FNB had done its best to forestall any political fallout from the campaign. Harris had written to director-general in the Presidency, Rev Frank Chikane, on January 31 to reassure him that the campaign was a "nation-building initiative" and not meant to "jeopardise any of the hard work and progress of on-going initiatives between government and business".

"The campaign," wrote Harris, "is designed to create a platform for South Africans to constructively engage the president and government on the issue of crime. We believe that dealing with crime effectively will put SA in a strong position to achieve the ultimate goal -- the elimination of poverty."

But FNB is the banker for many government and quasi-government bodies, including the National Treasury, the SA Revenue Service, three provincial governments and companies such as Telkom and Transnet, and private discussions and comments in other newspapers suggest government would have taken a very dim view of FNB's campaign. The result is a bruised bank and a victorious Presidency, which, with the help of BLSA, managed to head off a potentially awkward campaign just before Mbeki gives his state of the nation speech to Parliament this week.

After this drubbing, and Anglo American CE Tony Trahar's public mauling by Mbeki a few years ago for suggesting SA was still a political risk for investors, business will probably now keep its head down and, publicly at least, mind its own business.
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