Money and politics in South Africa

Jeremy Cronin argues that it is time for foreign funding of electoral politics to be banned

Corporate capture, money and electoral politics in South Africa

Part One

Among the more important announcements in the Alliance Political Council statement issued earlier this week is the intention to consider introducing legislation to regulate party political funding. But why is it an important consideration?

In July, ANC campaign coordinator, Nomvula Mokoyane gave an off-the-cuff figure of a massive R1-billion rand when asked how much the ANC had spent on the local government election campaign. The ANC Treasurer General (TG) subsequently indicated the figure was “less than that”. I’m told the official figure of what passed through the TG’s books was some R380-million.

However the R380-million doesn’t include a wide range of other funding that went to ANC individuals and groupings for the elections. Mpumalanga premier David Mabuza, for instance, enjoyed the use of an ANC- (and “Premier Mabuza- “) branded helicopter for ten days on the eve of the elections (City Press 31 July 2016). I assume that neither the helicopter nor the further donation to Mabuza of R7,5-million by businessman Robert Gumede were accounted for in the ANC’s official election spend.

It will be argued de-centralised fund-raising for the ANC shows positive initiative and should be encouraged. That’s not entirely wrong, provided there’s transparent accounting. However, while a branch fund-raising raffle is one thing, millions of rands of corporate sponsorship to individuals or specific groupings is quite another. The threat of factionalism, personality cults and of corporate capture then becomes serious. Equally serious is the potential loss of collective national capacity by the ANC to pool funding and strategically direct it to where it’s most needed. The DA, incidentally, appears to have a much greater strategic control over its funding.

These are some of the internal reasons why the ANC should endorse transparent public regulation of political funding. But there are also other equally important considerations.

Interestingly, the DA’s electoral budget was not much less than the ANC’s official R380m. According to a Sunday Times report: “DA officials said its election budget of R350m was likely to be exceeded thanks to private funders.” (July 31, 2016). A party with less than half the electoral support of the ANC was able to fund-raise almost the same amount. We don’t know who the DA’s “private funders” are but we can all guess they will include the major corporates in South Africa, along with foreign-funding from a London-based, South African émigré network with wealth stashed away in tax havens.

One major DA funder is likely to be London-based Natie Kirsh. An ex-South African, Kirsh is now a Swazi citizen with residency status in the UK and the US. With a global property empire, Kirsh was listed in 2015 by Forbes as the 435th richest person in the world. His companies are listed in tax havens like the British Virgin Islands and Liberia and he is the largest shareholder in Magal Security Systems involved notoriously in the supply of electronic fencing for the apartheid wall in the West Bank, Palestine. It was Kirsh who was the money behind the abortive attempt to float Mamphela Ramphele as the DA’s presidential candidate for the 2014 elections.  Talk about corporate capture!

Indeed, the major corporates and émigré circles have been seriously encouraged by the DA’s take-over of three more major metros. Reportedly large sums are pouring into DA coffers with the 2019 national elections in sight. According to Peter Bruce: “Ever since the local government elections in August, I’m told, money has been pouring into the DA’s coffers – more than R400m of it – as people back them to build a strong and durable campaign for 2019.” (Business Day, 30 September 2016).

If the ANC is to remotely live up to its claim to be a disciplined force of the left, then there’s no way, in any medium-term scenario that it can ever win the private corporate fund-raising race against the DA.

This leads to another danger – that the ANC will be tempted to fund itself covertly out of state-owned enterprises. If SOEs have a principled, transparent and even-handed approach to contributing to multi-party democracy in SA, that’s fine. However, consider Brazil and the current fate of the formerly ruling party, the PT, to understand the dangers of covert party political (and personal) funding derived from state-owned corporations.

What about the EFF? On the evidence of a relatively prominent, nation-wide poster campaign and the logistical costs of several large rallies, the EFF clearly also had significant funding.  A figure of “not more than R10m” mentioned by one EFF spokesperson is certainly an under-statement. However, it’s clear EFF funding was significantly less than that of the ANC and DA, which explains the R30m election campaign debt one EFF leader has mentioned, as well as the EFF’s attempt to tax newly elected EFF councillors 50 percent of their salaries for the first three months.

Apart from the proportional party political allocation made from public funds, the actual sources of EFF funding are not publicly available. There are, however, occasional glimpses of where some of it might be coming from. In a 2015 City Press article, Adriano Mazzotti, an Italian with underworld connections and an associate of the convicted criminal Glen Agliotti, admitted it was he who donated R200,000 to enable the EFF to register as a political party ahead of the 2014 national elections.

While the EFF may also have benefited from more mainstream monopoly capital funding – some reports have nodded in the direction of Malema’s cosy interaction with Lord Renwick and other neo-colonial barons in the UK – it’s unlikely big capital will fund the EFF to the hilt. It is, however, distinctly possible they will be happy to drip-feed the EFF just enough for it to perform a “useful” 8 to 10 percent electoral role in 2019. From a neo-colonial perspective, the EFF unwittingly played its “useful” role to perfection in the August 3 polls. 

These are some of the key reasons why, as a matter of urgency (if belatedly), we should support tight regulation of and public transparency in party political funding. Stringent caps on what corporations and wealthy individuals may contribute must be introduced. To safeguard national popular sovereignty, foreign funding of South African electoral politics should be banned.

Part Two

Party political, candidate and faction funding: An entry point of corporate-capture not only as sordid form of rampant looting and criminality

In Part One last week, we noted the large sums political parties spent in the August 3 local government elections. The ANC’s official budget was R380 million, and the DA budgeted R350 million, but both parties certainly spent much more. In the case of the ANC, we further noted that it was not just the official Treasurer General’s budget that benefited from campaign donations. There is evidence of considerable campaign funding going to individuals and groupings within the ANC, with all of the obvious dangers of factionalism, patronage and clientelism. The lack of transparency and public regulation of this funding has serious implications for the health of both the ANC itself and of our hard-won democratic dispensation more broadly.

But there are further problematic features of these hundreds of millions of rands spent by South African political parties in the local government election campaigns. It is money diverted from productive and developmental investment into consumables with built-in redundancy – posters now fading on lamp-poles, media advertising in the major monopoly-controlled outlets, T-shirts mostly imported from outside, and razzmatazz mass rallies. In the case of the ANC, this is money that might more usefully have been expended on social campaigns, for example against the predatory behaviour of loan sharks, or abuses of garnishee orders, or illegal evictions. 

In short, we are spending hundreds of millions of rands on politics as spectacle in which the monopoly-controlled media-advertising complex reaps millions with little or any developmental impact. (For useful studies focusing on the US in this respect, see Robert W McChesney and John Nichols, “The Bull Market. Political Advertising”, Monthly Review, vol.63, April 2012; and Mary V Wrenn, “Surplus Absorption and Waste in Neoliberal Monopoly Capitalism”, Monthly Review, vol.68, July-August 2016 – both available on the Monthly Review website http://monthlyreview.org)

The significant sums South African political parties are now spending on election campaigns pale, of course, when compared to electoral spending in what is probably the most corporately-captured political system on earth – electoral politics in the US. By the end of August, Hillary Clinton had raised $795m (R11bn) and Donald Trump had raised $403m (R5,6bn) for their respective presidential campaigns.

This money comes overwhelmingly from the big corporates, who often hedge their bets by supporting both candidates. More importantly, the enormous sums required not just to win presidential races, but even relatively minor local positions in the US system, has the effect of marginalising progressive alternatives. 

In the current US presidential elections it is easily forgotten that there are two other candidates besides Clinton and Trump, one of whom, Jill Stein of the Green Party, is an eminently likeable and progressive politician when compared to the unpopular Clinton and the demagogically dangerous Trump. But lack of corporate funding means that Stein gets very little coverage in the corporately dominated media. 

In the case of the Democratic Party itself, Bernie Sanders mounted a surprisingly successful challenge on a left-leaning programme for that party’s nomination. To compensate for the lack of major corporate funding, Sanders used innovative approaches like crowd-funding that drew in donations from hundreds of thousands of individual citizens. But, in the end and despite Sanders’ evident greater popular support, the sheer weight of Clinton’s corporate establishment defeated the Sanders’ initiative.

In the current South African reality, when we speak of “state capture”, or more accurately “corporate capture” of key parts of the state, we tend to be referring specifically to the parasitic looting of state owned enterprises, or serial loitering at a certain family’s Saxonwold Headquarters on the eve of key appointments. 

However, the US example reminds us that corporate capture does not necessarily have to take the sordid form of rampant looting and criminality. In the US, capitalist corporate culture is now so deeply embedded within the DNA of the political system, the revolving door between Wall Street and Washington and back again is so well-oiled, that brown envelop bribes are largely redundant. Despite (or rather because of) the hard-wired nature of corporate capture there, the US scores relatively well in Transparency International corruption-free ratings when compared to South Africa or Brazil.

It is, therefore, useful at this point to introduce a distinction between the interests of corporate capital-in-general, and the particular interests of a specific corporate entity, let us say a family-controlled Oakbay Investments, or, for that matter, the globalised Naspers-Media 24 octopus, which has been very adept at capturing well-located politicians and leading personalities in the SABC.  

It is, of course, a good thing that in the past months the widest range of South Africans has spoken up against brazen “state capture”. This groundswell from within and from well beyond the ANC-led movement has, in effect, forced the National Prosecuting Authority head Shawn Abrahams to back down (at least for the moment) on his shameful attempt to charge Comrade Pravin Gordhan on entirely spurious grounds. 

But, as the US case reminds us, there are other less brazen, more subtle forms of corporate capture of the state than the clumsiness of an Abrahams or the reckless piracy of the Guptas and their ilk. Yes, it is a positive thing that some 130 South African CEOs have spoken out in recent weeks against the politically-inspired attempt to charge the Minister of Finance. Together, let us hold the line against corruption, against the most venal forms of money-laundering, looting, and abuse of positions in the state. What has been demonstrated in the past weeks, just as in a notorious four days back in December last year, is that there are significant anti-bodies across our society to repel what some of us once referred to as “Zanufication”.

However, let us also not become strategically naïve. From the side of the 130-odd CEO signatories  against state capture we are lectured on “leadership morality”, on “the rule of law”, and on constitutionality – but many of these business-people, black and white, are senior players in market dominance abuse, and in price collusive activities. How many of them are hiding their wealth in shadowy tax havens? How many have actively engaged in capital flight, or speculatively shorted the rand? Much of this might not be illegal, but is it moral? 

Monopoly capital objects to the Guptas (capital-in-particular) deciding on ministerial appointments, but they believe it is their god-given right (as capital-in-general) to decide who should be Minister of Finance or Reserve Bank governor.

Let us unite across ideological boundaries in condemning the abuse of state power whether by the NPA or the Hawks. However, at the same time, it is important to distinguish public interest from corporate interest, and it is important to distinguish between the interests of capital-in-general and the interests of this or that individual corporation.

The behaviour of Oakbay is rightly condemned by capital-in-general – hence the possibility of the current, broad-based, multi-class outcry. It is often less obvious, but even more important to understand, that the public interest – or, to put it less neutrally, the strategic interests of the working class and poor - and those of capital-in-general do not coincide.

It is critical in the immediate situation to hold the line against rampant corruption. If key state owned corporations like Transnet and Eskom are pillaged then the ability of a democratically elected government to carry forward its popular mandate, including confronting private monopoly capital-in-general, will be seriously compromised. But the march against “state capture” today, must not goose-step us backwards to the late-1990s neo-liberal heyday of GEAR, privatisation, and mindless market liberalisation.

Introducing public transparency and effective regulation of party political funding is one small but important element in the overall struggle to defend hard-won, popular, democratic sovereignty in our country.

Jeremy Cronin is South African Communist Party’s First Deputy General Secretary.

These two articles first appeared in Umsebenzi Online, the online journal of the SACP.