WILLIAM GUMEDE | What’s good for the party isn’t necessarily good for the people

When a governing party has shares — whether directly or via subsidiaries or trusts — in a commercial company doing business with the state or exploiting natural resources, a conflict of interest may arise if that company’s activities are seen to run counter to the public interest.

A governing party is bound to do so in the interests of the country, not those of the party or its leaders, or a third party.

Governing parties and their subsidiaries should not be allowed to do business with government entities at national, provincial or municipal level; neither should they be allowed to do business with private companies. Both activities conflict with a governing party’s duty as custodian of the public’s, country’s and voters’ interests.

Share ownership by political parties directly, via subsidiaries or trusts should be prohibited by the Independent Electoral Commission (IEC) because political parties almost invariably favour the interests of the companies they have stakes in above those of other companies, or of their voters and the country.

After its unbanning, the ANC established at least two major subsidiaries in 1994 to bid for government and private contracts and secure stakes in private companies and in public-private partnerships.

The founding documents of the Batho Batho Trust, which was set up as an investment vehicle for the ANC, state that the trust was intended to “receive dividends” for the ANC from investment opportunities in post-apartheid SA. Publicly, the ANC has said the trust’s beneficiaries “are historically disadvantaged individuals”.

Thebe Investment Corporation was founded in 1992 by the Batho Batho Trust, which  now owns about 47.5% of Thebe, giving the ANC a controlling stake in a company that has investments in about 41 companies.

Thebe’s shareholders include Absa Capital, which owns 22.5%, and Sanlam with 9.8%. According to its website, Thebe has shares in Vodacom, Shell SA Refinery, Altech, Netstar, Kaya FM and Combined Motor Holdings.

Shell SA’s downstream business is a 72:28 joint venture between Shell Group Holdings, and Thebe, namely Shell Downstream SA.

Shell started a seismic survey off the environmentally sensitive Wild Coast in the Eastern Cape from  December 1 to search for oil and gas. The exploration comes months after the International Energy Agency said no new fossil-fuel development would be compatible with sustainable climate targets.

The question can be therefore be asked whether the ANC’s partnership, through Thebe, in Shell’s Wild Coast exploration is a case of the narrow interests of the party being more important than the public interests of SA and the environment.

The ANC in the post-apartheid era also established Chancellor House, its investment arm that has It secured significant stakes in government contracts and BEE deals, and shareholdings in private companies doing business with the government.  

Chancellor House has bid for government tenders in partnership with private companies. For example, through its Chancellor House Trust it was awarded a 25% stake in Hitachi Power Africa (now Mitsubishi Hitachi Power Africa), which was awarded a R20bn deal in 2005 to build all six boilers at Eskom’s Kusile and Medupi power stations. Chancellor House made a 5,000% return on its partnership with Hitachi.

In 2015, the US Securities & Exchange Commission (SEC) investigated Hitachi for its business partnership with Chancellor House, and deemed it irregular. To stop further action, Hitachi in September 2015 offered to pay $19m to the US regulator.

The Eskom power projects were years over deadline and billions of rand over budget, contributing to the power outages that have slashed growth, caused thousands of businesses to close and plunged many people into unemployment and poverty.

In 2017 ANC treasurer-general Zweli Mkhize proposed a plan at the ANC’s national conference to sell the assets of Chancellor House, liquidate the company and place the proceeds in an endowment trust, to be called Luthuli House Trust. It appears this hasn’t happened.

According to the latest political party donor report by the IEC, Chancellor House was the ANC’s biggest donor this year, giving it R15m in August.

There is a danger that the ANC’s Thebe investment in Shell could turn out to be profitable for the ANC, but harmful to SA’s environment, much as Chancellor House’s involvement with Hitachi was profitable for the ANC but disastrous for SA’s national interests.

• Gumede is associate professor, School of Governance, University of the Witwatersrand and author of  Restless Nation: Making Sense of Troubled Times (Tafelberg)