Kigoda Consulting

Participation in the ANC’s Progressive Business Forum should be declared as a contribution to a political party

30 October 2012

The main focus of South Africa’s ruling African National Congress’ (ANC) national conference, which will be held in Manguang in December 2012, will be whether or not Jacob Zuma is re-elected for another five-year term as ANC president.  Analysts and domestic and international investors, however, will also be closely monitoring the conference policy debates and ensuing resolutions. These investors will include a group of companies that will pay for privileged access to the event through the ANC’s Progressive Business Forum (PBF). On 28 October the Sunday Times reported that this group will include all four major banks (Absa, Standard Bank, FNB and Nedbank) and mobile telecommunications operator Cell C.

According to its website, the PBF was formed in 2006 “with the primary objective of creating an ongoing dialogue between the ANC and the business community”. Benefits include discounts on sponsored products and services, opportunities to participate in international trade delegations and access to specially organised events, which have included breakfast briefings with government ministers. As a result, the Forum has attracted considerable controversy amid claims that it is tantamount to selling access to public officials. Fees range from R4,000 per annum to R60,000 per annum. However, it appears that for special events such as the ANC national conference, additional packages can be purchased. The most exclusive “titanium” package, for example, includes a guaranteed seat at the main banqueting table and costs R600,000. Despite the surrounding controversy, the PBF’s membership has, unsurprisingly, continued to grow. In September 2011, the PBF indicated that it had close to 6,000 subscribers up from around 2,000 in March 2007.

Although the PBF might be viewed as just another business forum, given that subscriptions and other payments flow directly to the ANC, the issues surrounding the PBF should be seen in the wider context of political donations. The ANC is clearly using the PBF as an opportunity to raise funds. While companies understandably want to access events where they can gain first-hand knowledge of political thinking and decision-making, the fact that the PBF also charges a fee for the opportunity for delegates to lobby and interact with ministers and senior government officials, many of whom are ANC appointees, gives it a different quality. This is not the sort of opportunity accorded to the average voter. Clearly, by joining the PBF, companies hope to gain more than just insight: access is key. While it is in the interests of business to support and strengthen democratic institutions, which could include political parties, it is essential that this does not result in powerful interest groups being able to corrupt democratic processes and undermine public interest through donations that come with conditions attached. This is particularly important in South Africa where the blurring of lines between business and politics is a major aspect of corruption.

Currently, it is not a legal requirement in South Africa to declare private funding to political parties. At the ANC’s 2007 national conference, the party resolved to “develop guidelines and policy on public and private funding, including how to regulate investment vehicles”. However, little has been done and given the political environment, there is unlikely to be a major reversal in direction after Mangaung. Several companies do follow best practice in terms of corporate governance and are transparent about the amounts donated by them to political parties. Under the Global Reporting Initiative, companies are only encouraged to declare “total financial and in-kind contributions to political parties, politicians and related institutions” (our italics). However, given the negative way in which money can corrupt political systems and ultimately undermine the business environment, shouldn’t more companies be even more transparent and itemise their donations? AngloGold Ashanti declared in its 2011 Sustainability Report that “an amount of approximately US$18,000 was paid to the African National Congress Youth League. Its purpose was to enable AngloGold Ashanti personnel to attend the League’s conference where the question of mines nationalisation was being discussed. It was not intended as a donation. The amount is however declared as it was, in effect, a financial contribution to a political organisation. No other political party donations were made.” Those companies present in the PBF’s Business Lounge at Mangaung in December should be as transparent in declaring their subscription and banqueting fees as political contributions.

• Corporate Governance
• ESG
• Lobbying
• Political Donations
• SRI