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Vol 64 No 6

Published 16th March 2023

South Africa

How money talks in national elections

A law forcing political parties to disclose their funding has cast light on cash from three local billionaires and a Russian oligarch

With national elections due to be held next year, concerns are brewing over whether donations could be used to buy influence. Africa Confidential's analysis of declarations by South Africa's Independent Electoral Commission (IEC) indicates that about 80% of private donations since the Political Party Funding Act was implemented in April 2021 have come from three local billionaires, a multinational oil company and a Russian oligarch who is under United States sanctions.

South African mining billionaire Patrice Motsepe donated 28 million rand ($1.5m); the multi-billionaire Oppenheimer dynasty R25m ($1.39m); Martin Moshal, an online gambling billionaire and philanthropist, R26m ($1.43m); and the Batho Batho Trust, the ANC's joint venture with Shell South Africa via Thebe Investments, R15m ($824 000).

President Cyril Ramaphosa, himself a billionaire, has made several declarations but on a more modest scale (R366,000-$20,109) than his brother-in-law Motsepe.

The Oppenheimer family's donations came in the form of a R15m ($824 000) contribution to the Democratic Alliance (DA) from Mary Slack, daughter of Harry and Bridget Oppenheimer; and R10m ($555,000) from her three daughters in equal tranches for Herman Mashaba's ActionSA. Slack said she was making the donation to strengthen democracy and build a multi-party system.

But the populist Economic Freedom Fighters (EFF) of Julius Malema said the donation to ActionSA had prevented the EFF from holding coalition talks with it. An EFF spokesman said the Oppenheimer family wanted to 'own' ActionSA, a breakaway from the DA which pollsters say could win more than 5% of the vote next year.

That matters in a national election in which the ANC's share of the vote is expected to fall short of 50% for the first time, according to the latest opinion surveys.

The DA is expected to win 20%, the EFF 12%, with the remaining 20% or so going to smaller parties such as the KwaZulu-Natal-based Inkatha Freedom Party (IFP) and the right-wing Freedom Front-plus (FF+) who between them command about 10% of the vote.

According to the IEC's report for the period from October to end-December last year, the largest donations were made to the ANC in the form of a R15m ($824,000) in-kind payment to the tax collector (South Africa Revenue Service) by the Batho Batho Trust and a further R15m ($824,000) from Viktor Vekselberg's United Manganese Kalahari (UMK) to cover the costs of the ANC's elective conference in December last year (Dispatches 23/12/22, Ramaphosa's win in ANC elections opens a door to policy shifts and reshuffles). Vekselberg, an ally of Russian President Vladimir Putin, is subject to US sanctions against dealing with Russia.

The ANC made a further late declaration of R10m ($549,450) received during the previous quarter. Over the same period, the DA received R2.9m ($16,000), ActionSA got R4.9m ($270,000) and the EFF R202,000 ($11,000).

For the 21-month period from April 2021, the DA received several million rand in foreign funding from German, Danish and Dutch foundations.

Under the Political Party Funding Act, any donation above R100,000 must be declared and no single donation per quarter may exceed R15m in cash or kind. Foreign funding must not exceed R5m per quarter.

Donors are also encouraged to contribute to a Multi-Party Democracy Fund (MPDF), which is distributed on a part-proportional and part-equitable basis, but donations have been sparse. Several donors – including Motsepe, Moshal, the Oppenheimers and Media giant News24 – have contributed to more than one party.

Motsepe's contributions came via his own name, his mining conglomerate African Rainbow Minerals, and Botho Botho Commercial Enterprises, a trust which he heads.

Overall, for the period from April 2021, the ANC received R115.6m ($6.42m) followed by the DA with R77.9m ($4.23m), ActionSA with R25.9m ($1.42m) and the Economic Freedom Fighters with R4.4m ($242 000), mostly in-kind.

A further R40m ($2.2m) or so went to smaller parties. The IEC monitors only private donations. All parties receive a contribution proportional to their vote share from the IEC.

Vekselberg is in a joint venture with the ANC in a northern Cape manganese mine which has achieved windfall profits in recent years. In 2020 alone UMK, in which Vekselberg has a 49% stake via linked companies, declared dividends of R2.4 billion ($133m).

The ANC's 22% share in the joint venture via its funding front, Chancellor House (CH), netted the party R528m ($29.3m) in profits in 2020, according to public records of Cyprus-registered New African Manganese Investments (Nami), the Russian half of the venture.

Vekselberg was placed under sanctions by the US along with five other Russian oligarchs in 2018, and the restrictions on his assets were tightened following the Russian invasion of Ukraine last year.

According to an amaBhungane investigation published in the Daily Maverick in May last year, Vekselberg has avoided contravening the restrictions on his investments by using a web of inter-linked front companies that keep him short of a 50% share in any of them which would trigger the 'designation' of an offending company under US law (AC Vol 63 No 13, How manganese pipeline helps the ANC).

He holds his shares via Nami, which in turn owns 51% of Majestic Silver Trading 40 (MST), which is a consortium including the ANC's CH.

Between 2020 and 2021, the ANC was on the edge of bankruptcy. It had racked up more than R100m ($5.5m) in arrears as well as owing the taxman more than R80m ($4.4m). We hear that the windfall from the joint venture with Vekselberg enabled it to clear its debts and meet commitments in the run-up to crucial national elections expected in the second quarter of next year.

Should the ANC vote fall well below 50%, more centrist party officials favour the DA as a coalition partner given the impact a coalition with the EFF would have on foreign investors.

Huge profits from the manganese mine may help explain why the ANC declines to criticise Russia's invasion of Ukraine. The recent hosting of Russian Foreign Minister Sergey Lavrov and the joint naval exercises with Russia and China to coincide with the first anniversary of the invasion undermine South Africa's claim to neutrality, but it brings other benefits (AC Vol 63 No 9, War offers Ramaphosa more options & Vol 63 No 11, Diplomacy on ice). One of these would be South Africa's hosting of the BRICS (Brazil, Russia, India, China and South Africa) summit this year and its invitation to other African states such as Algeria, Egypt and Nigeria to join it.

Of the R257m ($14.12m) donated to parties between April 2021 and December 2022, at least R217m ($11.9m) came from four sources but the declarations are not all transparent.

ANC leaders are divided over how much transparency helps national politics. Deputy President Paul Mashatile last year called for a review of the Political Party Funding Act as 'it is making the funding environment more difficult' (AC Vol 64 No 4, Mashatile set to be the heir presumptive).

Yet Ramaphosa had hailed the law as a breakthrough in the fight against corruption. With the Phala Phala cash in the sofa scandal still unravelling – some have linked it to secret campaign funding – Ramaphosa may choose to revise his enthusiastic stance (AC Vol 63 No 24, A December surprise threatens Ramaphosa's second term).

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