As one might expect, given his own widely reported conflicts of interest, President Jacob Zuma sees nothing wrong with Chancellor House and other investment companies linked to political parties landing state business. His response to a parliamentary question three years ago about party investment companies bidding for work in the government’s infrastructure build programme is revealing.
He told the house that he knew of no law against it, adding that it could not be called corruption, which should be defined as “where people do wrong things”.
Zuma does not appear to understand the concept of conflicting interests. If a bidding company’s financial relationship with a ruling party has the potential to favour it in the award of a state tender, it should not be bidding in the first place. Such conflicts invite the undue exercise of influence and corruption.
It is worth noting the public protector’s finding in 2009 that Valli Moosa, who was simultaneously Eskom chairperson and a member of ANC national executive committee’s finance committee, acted improperly by not recusing himself from discussions of the Medupi power station boiler contract, in which Chancellor House had a stake.
Zuma may think it fine to use the state to bolster the ANC’s finances, but other senior party figures seem to disagree. Both the party’s current treasurer general, Zweli Mkhize, and his predecessor, Mathews Phosa, have publicly stated that Chancellor House should not do business with the state.
The pressing need for resources, amid regular reports that the ANC is strapped for cash, has clearly trumped such concerns. There has been no change in ANC policy – indeed, as we report this week, Chancellor House is now bidding for another large government contract, as part of the Colenso Power consortium planning to construct a multibillion-rand coal-fired power station in the KwaZulu-Natal town.
The chutzpah of Chancellor House’s bosses in trying for another bite of the Eskom cherry is breathtaking. Amid much controversy, Chancellor House was a shareholder in Hitachi Power Africa, which was awarded boiler contracts worth R40-billion at the Medupi and Kusile power stations. Both contracts have suffered repeated delays: acting Eskom chief executive Brian Molefe said in April that, though originally scheduled for completion by 2017, they will only be fully operational in 2021.
The ANC’s involvement through its business front can be seen as a contributing factor. Despite huge problems with the welding of the boilers at Medupi, Hitachi Power Africa appears to have been treated with kid gloves by Eskom. It was retained on the job.
This is more than an ethical or even a legal issue. Unresolved conflicts of interest, particularly those involving politically connected companies, can undermine the provision of basic infrastructural services – such as electricity – to poor South Africans. Legislation clearly criminalising conflicted tendering would help. But ultimately the problem is South Africa’s party funding law, which is among the laxest in the world.
The government should follow the resolution of the ANC’s 2007 Polokwane conference calling for stricter legislation. This should at least reveal which private companies are funding political parties – and it should keep party investment companies from doing business with the state altogether.