ANC shareholdings present conflict of interest

What is happening to South Africa’s African National Congress (ANC) and its leadership? There can be no doubt that for a ruling party to be a shareholder in a private company that tenders for state contracts represents a clear conflict of interest.

The ANC has a financial arm, Chancellor House, which owns a 25 per cent stake in Hitachi Power Africa. Hitachi has been awarded a contract by Eskom, the electricity utility, to supply and install boilers for power stations.

The ANC’s stake in the deal through Chancellor House was estimated in 2008 to be ZAR5.8 billion. For the sake of transparency, accountability and clean governance there has to be a firewall between the ruling political party and its leaders on the one hand, and state and private companies, on the other.

It is hardly unlikely that when a company that is partially owned by the ANC is bidding for a government or parastatal tender, that such a company will not be awarded the contract. Soon after the ANC’s national conference in December 2007, then newly minted party treasurer Mathews Phosa promised, as part of a post-Polokwane spring-cleaning, to disinvest the party’s shares in Hitachi. This has not happened. The ANC must do so, and it must close down Chancellor House.

Good ruling parties govern in the broadest public interest. Private companies have a narrow motive – that of expressly securing a profit for their shareholders. They rarely work for the benefit of the public interest. It would be a shame if the ANC leadership governs in a way that maximises its profits in its investments, rather than maximising the prosperity of the whole of SA Inc.

If the party is a major shareholder in Hitachi, how can one be certain that the ANC leadership applied their minds objectively in the proposed 35 per cent tariff hike proposed by Eskom? The tariff increase is likely to hit the struggling economy, families and businesses at the worst possible moment. Ultimately, ordinary black South Africans – the ANC’s bedrock constituency, are going to suffer the hardest.

To get our economy back on an even keel demands tough choices, difficult trade-offs and decisions. Some of these will no doubt be very painful. Knowing such decisions are taken with the best long-term interests of the country at heart, rather than for the profit of a few individuals, make such choices more palatable.

Similarly, to award state contracts for critical services to black economic empowerment (BEE) companies on the basis of their owners’ political connections or liberal donations to the ANC, while knowing that they do not have the capacity to delivery, and so again robbing the poor of ‘a better life’, is equally wrong.

Similarly, it is unacceptable that state-owned companies disburse finance or tenders to businesses linked to their own board directors. It is just silly for someone to say when the decision was made, ‘I recused myself from the meeting where the decision was made’. Neither is it enough for state-owned companies to say they have disclosed such transactions in annual reports. The point is: If your friends and comrades are on the board that will make the decision to award a tender to your company, you do not need to be physically there.

Ultimately, we also need to bring greater transparency to the funding of political parties. Knowing which companies or individuals have donated to the ANC, Democratic Alliance (DA) or Congress of the People (COPE), is almost the only way to know whether they have secured their tenders solely on the basis of this, rather than merit.

Almost every African liberation and independence movement lost the plot when they, or individual leaders, started to dabble in business, securing state tenders and contracts, trying to make profit, for themselves or the party leadership, rather than at all times governing in the broadest public interest.

BROUGHT TO YOU BY PAMBAZUKA NEWS

* This article first appeared in the Sowetan.
* William Gumede is co-editor (with Leslie Dikeni) of recently released The Poverty of Ideas.