Chancellor House: unconstitutional, illegal and criminal considerations
It is important that there is a proper understanding of what Chancellor House is doing to the fabric of South African society. As investment arm of the governing ANC, Chancellor House has been instrumental in raising funds for the ANC's election war-chest out of all proportion to the puny amounts that the opposition parties in our "dominant party state" are able to amass through their fund raising efforts. The Institute for Democracy in Africa (IDASA) became so concerned about the abuses inherently possible in our unregulated political party funding arena a few years ago that it litigated the issue in the High Court. The outcome of the matter was fudged by a promise that steps would be taken to legislate a regulatory framework that would ensure the "free and fair" elections which citizens are entitled to under our progressive Constitution. The promise has not been kept, no suitable draft legislation has been introduced, let alone made law. This may well amount to contempt of court, unless a convincing excuse for not addressing the matter exists.The absence of a regulatory system does not mean that it is open season for Chancellor House to do as it pleases. In any constitutional democracy all conduct is constrained by the law and the Constitution itself; the alternative is the "tyranny of the majority", a state of affairs that is wholly inconsistent with the fundamental fairness that is at the root of the rule of law.
There have been comments in the media which suggest that the modus operandi of Chancellor House is unethical, improper and immoral. This criticism is based upon the willingness of Chancellor House to do business with the state and para-statals in order to amass profits for the benefit, directly or indirectly, of the ANC election machine. Certainly, the ANC is able to conduct election campaigns in a style and on a scale that is not remotely matched by any other party contesting for the popular vote.
The most egregious example of the known methods adopted by Chancellor House is that of its role in the Hitachi Power Africa deal with Eskom. In brief: the ANC identified a need for extensive further funding for upcoming elections. The directors of Chancellor House casting about for a juicy deal, hit upon the idea of taking a quarter share (and directorships) in Hitachi Power Africa, which then tendered successfully to build massive boilers for new power stations being developed by Eskom. The chair of the tender board involved was none other than Valli Moosa, a former ANC cabinet minister, and the top management of Eskom is of course shot through with deployed cadres of the ANC there to do its bidding and to behave with unswerving loyalty to its national democratic revolution. Getting additional tariff funding from Nersa, to enable Eskom to pay for the boilers, so that Chancellor House can receive a bigger dividend, posed no problem at all. Nersa is also staffed with deployed cadres in all the right positions. The inwardness of the transaction is that the consumers of electricity who pay for the service they receive become contributors to the coffers of a political party, whether they wish to support it or not.
After Polokwane, the new Treasurer General of the ANC, Mathews Phosa, expressed concern about the palpable conflict of interest situation in the Eskom deal, and tried to exit from the situation, so far without success. (He also internally investigated the arms deals - findings have been kept confidential). Gwede Mantashe, ANC Secretary General and Chair of the SACP, can see nothing wrong with what is being done and relies upon Chancellor House's freedom of association and its right to do business.
It is this attitude that requires analysis. The criminal law frowns upon collusive dealings in which parties who are supposed to deal at arms length with each other are anything but at arms length. Furthermore, contracts concluded in circumstances in which a conflict of interests of sufficient proportions exists are voidable. This happens when persons in a fiduciary position, such as trustees or attorneys, act in a situation in which their personal and official interests clash. For example, attorneys are not allowed to act for and against the same client, for obvious reasons. These are not matters of ethics or good morals, they are illegal and can be interdicted or set aside if they are allowed to stand in the face of well founded criticism. Companies used for illegal purposes can be wound up on just and equitable grounds. Their ill gotten gains are then forfeited to the state.
The Constitution itself guarantees "free and fair elections" to all citizens and naturally requires compliance with the rule of law. The Independent Electoral Commission has to ensure that all elections are "free and fair". The SA Human Rights Commission is there to protect the human rights so guaranteed and the Office of the Public Protector can look into any irregularities in the conduct of elections in the country. No election in which only one protagonist has access to the type of resources that flow from the dealings of Chancellor House can ever be free and fair. None of the other political parties have investment arms that are in any way comparable to Chancellor House.
It was Zakes Mda who observed some years ago that "The biggest constraint to development is corruption at the centre." Andrew Feinstein, the former ANC MP, has made it public knowledge that bribes paid on the arms deals were used to fund the 1999 ANC election campaign. In all, R2,1 billion in bribes were paid on the arms deals according to his educated estimates. The role of Chancellor House in these machinations is not clear, but its not inconsiderable dividend flow from Eskom is in the public domain. This "politically connective" flow is a clear illustration of what Mda called "corruption at the centre". More recently, Sipho Pityana remarked that "A state that is unable to openly explain and justify its actions and to protect itself from the scourge of corruption can never serve the imperative of social transformation nor its people." This echoes the sentiments of Thabo Mbeki as related by his biographer, Mark Gevisser: "He was deeply distressed by the possibility of being succeeded by Zuma [as] part of a strategy to avoid prosecution...Mbeki allegedly worried that Zuma and his backers had no respect for the rule of law, and would be unaccountable to the constitutional dispensation the ANC had put in place."
If proper accountability is to be exacted from the ANC and its investment arm, it is not helpful to mischaracterise the illegal activities of Chancellor House as merely immoral or unethical. There are good grounds for a thorough and independent investigation of the goings on in Chancellor House. The trouble is that no official body of independent investigators exists since the demise of the Scorpions unit of the National Prosecuting Authority and there is accordingly none of the necessary political will available to set an investigation in train. Ostensibly independent constitutionally created institutions are saturated with deployed cadres who owe their primary loyalty to the ANC. Thus is responsiveness to the needs of ordinary people betrayed. In Gevisser's words: "A Zuma presidency...would be a dream shattered, irrevocably, as South Africa turned into yet another post-colonial kleptocracy; another 'footprint of despair' in the path of destruction away from the promises of uhuru."
Paul Hoffman SC
22nd November, 2010
