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By Ido Lekota | Apr 15, 2010 | COMMENTS [ 0 ]

THE debate about whether the ANC investment arm, Chancellor House, should or should not sell its stake in Hitachi Power Africa provides the opportunity to review how political parties are funded in this country.

THE debate about whether the ANC investment arm, Chancellor House, should or should not sell its stake in Hitachi Power Africa provides the opportunity to review how political parties are funded in this country.

Currently the funding mechanisms for political parties include private donations, the government - and through investment arms like Chancellor House.

Idasa has previously called for political parties to disclose their private funders but parties like the ANC, IFP and DA rejected the call.

The ANC, however, went on to say it believed that the funding of parties should be regulated. It has, however, never articulated as to how this should be done.

The Chancellor House saga has once again put this issue at centre stage.

In a letter he wrote to Eskom's acting chairman Mpho Makwana about the current saga around the Chancellor House Holdings, United Democratic Movement leader Bantu Holomisa said: "The UDM and others are concerned by the nexus between Eskom, Hitachi and Chancellor House - it seems international companies and bidders in general are exhorted to partner with ANC-aligned businesses.

"We witnessed a similar conflict of interest with ANC-aligned companies benefiting from the Telkom/Vodacom deal, as well as the arms deal.

"It is a symbiotic relationship between the ruling party and structures of the state.

"In this case, it leads to tacit government support for Eskom's raising of rates (the recent 25percent increase) and incurring debts (which will be also serviced by ratepayers ) while benefiting the ruling party."

Holomisa goes on to say: "The public protector has also pronounced that Eskom's then former chairman, Valli Moosa, should have recused himself from the meeting that took the decision in favour of Hitachi (and by extension approving financial gains for the ANC) because he had a conflict of interest."

The crux of Holomisa's and other opposition parties' concern is that Chancellor House owns a 25percent stake in Hitachi Africa - the company that has a R38billion contract to supply boilers to the two electricity power stations being built in Limpopo and Mpumalanga.

Chancellor House is said to be in line to make R1billion profit on the deal.

In his letter Holomisa suggests that having Moosa - who was a member of the ANC national executive committee - presiding in a process where a company in which his party has financial interest is awarded such a lucrative contract, amounted to conflict of interest.

Together with other opposition parties, Holomisa also questions the integrity of a process whereby the government has approved Eskom's increased rates to finance the building of new power stations which are to be built by the very same company in which the ruling party has financial interests.

Media reports indicate that the ANC is divided on this matter.

On Sunday ANC general treasurer Mathews Phosa announced that the party would sell its stake in Hitachi Power Africa. He went on to say that Popo Molefe, the chairman of Chancellor House Trust (the body through which the ANC benefits from Chancellor House investments), was briefed about the planned sale.

But Molefe has come out to say that the trust - as a shareholder - in Chancellor House Holdings, could not decide whether to disinvest from Hitachi Power Africa, and that it was for the board to make that decision.

The ruling party's response on this matter is a clear indication of the murkiness of political parties being involved in business.

The general response, mainly from the ANC and its allies, has been that the ANC - like other organisations - is entitled to engage in business. This may be the case - but the reality is that the ANC is not an ordinary political party. It is the ruling party enjoying the power of incumbency.

Concern raised in this regard is that as the ruling party, the ANC could use its influence to profit from government contracts.

In such instances there is also the danger that, driven by the profit motive, the incumbent party could increase the cost of service delivery, as it is now suggested in the case of the Eskom's 25percent rate increase.

The ANC-led government could also make policy decisions based not on what is necessarily good for the people, but rather on what is good for business.

And on the other hand, the private sector could offer the government lucrative business opportunities to prevent it from passing policies that would be against the interests of big business.

While these concerns could be dismissed as the imagination of afro-pessimists , they could become realities as they have in other developing countries.


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