Chancellor House the biggest ‘front' of all - Zille

DA leader says the pot in the presidency has been calling various kettles black

Yesterday, in an address to a Black Management Forum (BMF) symposium, President Jacob Zuma tried to present himself as a defender of the Constitution.

Despite the irony of this claim, it represents some progress. Not long ago, President Zuma repeatedly and proudly stated that the ANC was more important than the Constitution. And he showed that he meant it when he proceeded to undermine the independence of the criminal justice system to protect himself and his closest allies from prosecution.

But, in trying to project himself as a defender of the Constitution yesterday, Zuma bizarrely chose to attack the Democratic Alliance for lodging two court applications that, if successful, would overturn two of the most unconstitutional decisions ever taken in our country.

The first is the DA's application for the High Court to review the National Prosecuting Authority's decision to drop the corruption charges against Zuma on the eve of the 2009 election, despite the overwhelming prima facie case against him. The second is the DA's application to have Zuma's decision to appoint Menzi Simelane (a man who does not believe in prosecutorial independence) as head of the NPA declared invalid and unconstitutional.

In his address yesterday, Zuma said: "We have noticed in recent months a tendency to use the Constitution by some parties to block transformation, or to seek to reverse decisions made by the Executive, through endless court actions."

This is deeply ironic.

As everyone knows, it is Zuma who is the past-master of "endless court actions" to prevent the law taking its course. He opposed every aspect of the state's corruption case against him on procedural grounds to prolong it until he had the political power to undermine the constitution to make it go away. Unlike the DA, Zuma can rely on a limitless amount of taxpayer's money to do so. He will continue to drag out the appeal as long as he possibly can.

Zuma needs to understand that it is his unconstitutional behaviour that needs to be called into question, not the DA's legal challenge of it. Far from "petty politicking" - as Zuma called these court cases yesterday - they are fundamental to the future health of our constitutional democracy. If the DA is successful, we will send out a powerful message to Zuma and the ANC that they are not above the law, that some people are not more equal than others.

What was even more ironic was Zuma's assessment yesterday of Black Economic Empowerment (BEE). He acknowledged that BEE was not sufficiently broad-based and vowed to "identify where the current bottle-necks are in implementation, and eliminate the unintended consequences."

"We cannot allow an abuse of the [BEE] policy to empower just a few", he said, before railing against the "unintended consequence of fronting" which he said should be exposed and eradicated by the "various sectors involved."

What is astonishing about these remarks is that Zuma talks of BEE as if it was imposed on the ANC from elsewhere, as if he is powerless to take immediate action to stop it being perverted by the ANC. The ANC's perverted version of BEE, based on cadre deployment, is designed to benefit the politically faithful few. It is not an "unintended consequence" of the policy. It is the purpose.

If Zuma really wanted to stop "fronting", he would shut down the biggest "front company" in the country - the ANC's own front company, Chancellor House. This "front company" is the very manifestation of the ANC's approach to BEE. It is not intended to empower previously disadvantaged people, or to achieve what he calls "broad-based empowerment." It is designed to enrich the ANC. It does this through corruption. The ANC in government channels contracts and tenders to the ANC in business to enrich the ANC and its leaders.

As we know, Chancellor House channels hundreds of millions of rands (possibly billions) to the ANC through its stake in deals such as Hitachi Power Africa which won the Eskom tender to build boilers in Limpopo and Mpumalanga.

As the Institute for Security Studies has revealed, Chancellor House has a stake in numerous other companies too - most of which do business with the state. These include Wits Gold, Afgem, Bateman Africa (which has also won Eskom tenders), Tshole Business Solutions (which does work for various government departments) and Grindrod J&J logistics. I have no doubt that Chancellor House has many other dubious business interests that have not been exposed yet.

Most of these companies claim - as Hitachi Power Africa did last week - not to have known that Chancellor House was linked to the ANC at the time it acquired a stake in them. They say they believed Chancellor House was a bona fide BEE partner that would empower previously disadvantaged South Africans.

This is because Chancellor House, as the name suggests, is a front company that pretends to be something it is not. It does deals with the state under the guise of BEE and then gives the money to the ANC. That is fronting - the very practice that Zuma criticised yesterday. And it has nothing to do with BEE. It is crony enrichment.

So, if Zuma wanted to stop fronting, he would start by disbanding the mother of all front companies - Chancellor House.

Interestingly, for a short while, it appeared that the new ANC leadership after Polokwane would do just that. In February 2008, newly-elected ANC Treasurer-General Matthews Phosa announced that Chancellor House would pull out of the Eskom deal. "There will be no deals in the corner," he said, "it will be very transparent."

A week later, Phosa announced that he had commissioned an Ernst and Young forensic audit into the activities of Chancellor House. If there was evidence of wrongdoing, "the law will have to take its course", Phosa said.

Of course, as we know, Chancellor House never pulled out of the Eskom deal. And, since then, we have heard nothing of the Ernst and Young audit - either because it never happened or because it did happen and revealed that the pickings were too rich for the new ANC leadership to ignore. I am sure that once the Zuma power clique saw how much money was being generated by Chancellor House, their appetite to end this corruption waned considerably.

Besides disbanding Chancellor House, there is another thing Zuma can do if he wants to stop fronting and narrow-based BEE. He can take a leaf out of the City of Cape Town's book.

When the DA-led coalition came into power in 2006, we revoked the requirement stipulated by the previous ANC government that a company must be 30% black-owned to qualify as a supplier of goods and services to the City. We did so because we knew that this stipulation did nothing to broaden BEE, it simply ensured the same ANC cronies were repeatedly empowered. This effectively undermined the achievement of broad-based empowerment.

At the time we were, predictably, derided by the ANC for being 'anti-transformation.' But, as a result of this policy shift, the City increased the procurement from BEE and SMME companies from 40% to 80% between 2006 and the end of last year. This happened through broadening opportunities for the many, not manipulating outcomes for the few.

In the "open opportunity" system, empowerment is genuinely broad-based. The City increased the number of vendors from which it procures goods and services from 10,000 in 2007 to more than 15,000 at the beginning of this year.

The conclusion to be drawn from all this is that there are practical things Zuma can do to stop the perversion of BEE. But, if he does them, he will shut off the ANC's funding supply and his own power of patronage. He will alienate his cronies who repeatedly benefit from narrow-based BEE deals. So he continues to say one thing - and do the opposite.

In the same way, there are things that Zuma could do to uphold the Constitution to prevent corruption and power abuse. He could, for example, ensure that the Head of the NPA is not an ANC deployee. He could guarantee the independence of institutions in the criminal justice system. But, if he does these things, he and many of his allies would in all likelihood face renewed corruption charges against them. He certainly won't allow that.

For all these reasons, Zuma will not stop the perversion of the Constitution or of BEE. We must judge him by his actions, not his words.

This article by Helen Zille first appeared in SA Today, the weekly online newsletter of the Democratic Alliance

Click here to sign up to receive our free daily headline email newsletter