[Marxism] Viva capitalism viva! - South Africa 10 years on

glparramatta glparramatta at greenleft.org.au
Fri Mar 5 15:08:19 MST 2004


Mail & Guardian, 5 March

Inside the ANC Youth League's business empire

Wisani wa ka Ngobeni|Johannesburg

Once the cradle of young black leadership, the African National
Congress Youth League seems in part to have become a vehicle
for elites and a reference point for businesses seeking to engage
"political capital".

This account probes the extent to which the ruling party’s youth
wing may have been prepared to use its access to state power to
feather its own financial nest — and the extent to which business
people entering business relationships with league companies have
seen this as giving them special access to the government. Many
of the youth league’s office bearers are actively pursuing business
interests. Where did all this start?

In May 1997 ANC Youth League leaders met in downtown
Johannesburg to put their signatures to the founding documents of
a company, the National Youth Trade and Investments Corporation.

Backed by the technology group Gijima of well-connected
businessman Robert Gumede, the company was the league’s first
significant attempt, after the dawn of democracy in 1994, to branch
into the world of business.

The company was led by Kirro Kinana, then the youth league
deputy secretary general; Pemmy Majodina, then treasurer, and
Andries Nel, then a prominent member and now the ANC deputy
chief whip in Parliament.

The company made a number of attempts to secure government
contracts. In December 1997 it emerged that the youth league-
linked company was part of a consortium that had tendered to
construct two juvenile prisons in Mpumalanga.

The bid ran into trouble after Nel, who at the time was also a
member of Parliament’s correctional services portfolio committee,
disclosed his interest.

There was an outcry from opposition parties.

Later the same company was preferred bidder in another prison
contract near Pretoria, but that also fell through.

Through other, newer business vehicles, the youth league has had
more success — although league officials this week sought to
distance the league from these newer companies.

The Progressive Youth Investment Company (PYIC) was set up in
1999 and Lembede Investment Holdings in 2000 — the latter
named after Anton Lembede, elected the league’s first president in
1944.

Lembede is majority-owned by a charitable trust, the South African
Youth Development Trust, which features youth league secretary
general Fikile Mbalula as a trustee. A second trustee is Malose
Kekana, CEO of Umsobomvu Youth Fund, a youth development
fund set up by government. PYIC appears to be owned by the
same trust.

Kekana helped set up both PYIC and the trust before joining the
Umso-bomvu fund in 2001. He remains a trustee of the trust.
Songezo Mjongile, a member of the youth league’s national
executive committee, runs both PYIC and Lembede.

Mjongile this week said PYIC is no longer active and exists only to
hold shares in Khaya Car Hire, an empowerment company
associated with transport giant Imperial, and People’s Bank.

Lembede, on the other hand, controls or has had major
shareholdings in a range of ventures, not all of them successful,
spanning mining, financial services, forestry, property and
telecommunications.

In a number of cases these ventures have depended on state
opportunities — tenders, privatisations, operating licences — which
have, in some instances, created conflicts of interest for state
officials.

One of the best examples of this dilemma may have been the
debacle when the Komatiland state forests were privatised in 2002
to the Zama forestry consortium, only to be cancelled when it
emerged that the Department of Public Enterprises official who had
presided over the tender process, Andile Nkuhlu, had accepted
substantial gifts from the consortium.

An added conflict that was not highlighted at the time was that the
league was one of the major shareholders in Zama through
Lembede — while Nkuhlu was also a leading league member. Key
players in Lembede were responsible for the gifts to Nkuhlu.

A subsequent attempt by Lembede to benefit from the re-
privatisation of the same state forest failed last year.

But a case where the league has had success in a state
privatisation tender is its involvement in a consortium that bought
high-tech construction material company Fibretek, spun off from
state arms group Denel, in 2002.

Lembede also has a small stake in Two Consortium, one of the
successful bidders for the second national telephone operator
licence.

Many of the league’s business ventures, however, have
concentrated more strictly on the private sector. The best example
of this has been the mining empowerment deals struck with
controversial father-and-son team Roger and Brett Kebble.

But even here the marriage of what may be termed “political
capital” with commercial capital could lead to questions about
political impartiality. Take the battle last year between Deputy
President Jacob Zuma and national prosecuting head Bulelani
Ngcuka, when the Kebbles, who are both being prosecuted by
Ngcuka on unrelated fraud charges, both weighed in on Zuma’s
side. The youth league, very publicly, also criticised Ngcuka.

While league leaders may have been following the ANC’s political
line, the fact of their relationship with the Kebbles does give rise to
questions about their independence.

Lembede, according to its chief executive, Mjongile, has an annual
turnover of between R3-million and R5-million. As the company and
its deals are relatively young, greater profit may flow in years to
come from deals, such as that with the Kebbles, effected late last
year.

In spite of attempts this week by Mjongile and league officials to
downplay the relationship between Lembede and the league, the
flow of funds leaves little doubt about the link.

The league receives financial benefits from the trust, which, in turn,
as majority shareholder, benefits from dividends paid by Lembede.

In recent years the trust has dished out hundreds of thousands of
rands to the league. Mjongile confirmed this, but said most of the
money was used to support development projects organised by the
league

Though the trust has so far benefited only the league, Mjongile
denied that the league “owned” the trust. He said it was “unfair” to
describe Lembede as a youth league company. “There are other
shareholders in the company, including myself, [attorney] Themba
Langa and Mcebisi Mlonzi [the former Zama chief executive].”

Mjongile said Mbalula, the league’s general secretary, was involved
in the trust in his “own personal capacity”. This was echoed by
Mbalula, who said: “The youth league is a political party. Youth
league office bearers are involved in business in their own personal
capacity.”

Mbalula this week also denied that the league was associated with
Lembede. “There is no company that is being run by the youth
league. We do not control any company. [Lembede’s] Songezo
[Mjongile] is a member of the youth league. If Lembede decides to
donate money to the youth league it is the company’s own
discretion.”

Mbalula also sought to downplay his own role in the trust. “That
trust does not even exist anymore. I do not even remember the last
time we met. Yes I am a trustee but the trust is not active and we
are even thinking of cancelling it,” he said.

This was contradicted by Mjongile, who confirmed that the trust
was active and had in recent years received dividends from
Lembede.

Mjongile also confirmed that Mbalula, in his capacity as trustee,
had co-presided over the decision to “donate” money to the league.

Asked about Mbalula’s dual roles — as donor and representative of
the beneficiary — Mjongile said: “Well, I think the youth league
approached the trust through the treasurer and not the general
secretary.”

The trust’s deed, held by the master of the high court, describes
Mbalula as a “fundraiser for youth campaigns” and Umsobomvu
Youth Fund head Kekana, who remains as a trustee, as a
“banker”.

The beneficiaries of the trust are described “as every person
resident in the RSA under 35 years of age and every entity,
whether a company, cc, trust, or partnership, which in the opinion
of the trustees is able through its activities to promote the
economic, social or educational well-being of any such person”.

The object of the trust, according to the documents, is to promote
development, and “to assist beneficiaries to acquire assets”.

Mjongile confirmed that the trust supported a number of
programmes for the league. It donated money to the league’s 21st
congress in 2001 and funded certain aspects of the league’s Youth
Day celebrations last year.

Mjongile said the youth league regularly approached the trust for
financial assistance. “The youth league is involved in development
work. The trust supports the youth league on that,” he said.

Meanwhile, Brett Kebble, chief executive of JCI, which partnered
Lembede in the Randgold deal, this week commented: “My
personal policy and that of JCI is to make donations to political
parties that support democracy and we see it as our duty as
patriots so to do…

“Our policy on empowerment is equally transparent — JCI is one of
the most forward-looking companies in South Africa and is
committed to empowerment deals that contribute to skills transfer
and transactions that properly empower people.

“It would be very nice if other South African companies do the
same — at the moment a large number of so-called
“empowerment” transactions are designed either to provide a shield
to old-order capital or to allow one or two so-called empowered
individuals to build power bases in capital which will further their
political ambitions.

“These are the people who have the temerity to attack our
empowerment policies which are designed to really help people
across a broad-based front.”

http://www.mg.co.za/Content/l3.asp?ao=32216





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