BUSINESS MAVERICK 168

The ANC, a tax evader? Massive debt, unpaid salaries, dry donation taps

By Ray Mahlaka 12 September 2021

The ANC staff pickets outside Luthuli House on 6 September 2021. (Photo: Sharon Seretlo/Gallo Images)

The ANC is reportedly facing a smothering debt load of more than R200-million; it owes more than R100-million to the South African Revenue Service (Sars), and is heading into the third month of not paying salaries to its workers

Ray Mahlaka

First published in the Daily Maverick 168 weekly newspaper.

If the ANC were a person, it would be forced either to declare bankruptcy and undergo debt counselling or be in prison for failing to take demonstrable steps to turn its financial crisis around.

Although the true financial position of the ANC is not known since its books are not open to the public or even audited, the governing party is facing troubles on multiple fronts.

The ANC is reportedly facing a smothering debt load of more than R200-million; it owes more than R100-million to the South African Revenue Service (Sars); and is heading into the third month of not paying salaries to its workers.

The last problem has come to a head as disgruntled ANC workers planned to, but eventually didn’t, lay charges of fraud, corruption and theft against the party’s head honchos. The allegations against the ANC’s top five (excluding suspended Secretary-General Ace Magashule) about the party’s financial mess are damaging and are laid bare in an unsigned affidavit drafted by workers.

The workers have accused the ANC’s top five of deducting their monthly salaries for Unemployment Insurance Fund (UIF) benefits and Sars pay-as-you-earn (PAYE) tax over the past three years (from January 2018 to August 2021), but failed to hand over the deducted funds to the two institutions. The ANC has allegedly done the same when deductions are made from workers’ salaries for provident fund and medical aid benefits.

“The practices [of not paying taxes, medical aid, UIF and provident fund benefits] … are widespread and have taken place on a massive and nationwide scale over a substantially long period, amounting to hundreds of millions of rands, if not more,” reads the affidavit that would have formed the basis for criminal charges that would have been laid against the party’s top five. The workers said ANC senior officials have admitted to the wrongdoing of deducting salaries and pleaded with them not to refer the matter to the police.

The ANC and its treasurer-general, Paul Mashatile, were not available to comment to DM168 about the allegations proffered by its workers, who have also gone into detail about the hardships they face.

“The [number of] victims have run into hundreds or thousands of people over the years. Some of the victims have since passed on and thereby created further victims in the form of their family members and/or dependants who have had to incur unnecessary and unanticipated hospitalisation, funeral and other costs when they shockingly discovered at the time of their bereavement that their departed loved ones were not entitled to the benefits, which the accused persons [the ANC top five] had falsely misrepresented to be due to them.”

Deducting from workers’ salaries and not handing the funds over to relevant authorities is illegal, and the pernicious behaviour carries sanctions, including a criminal sentence or an organisation being slapped with a large bill for arrears.

In the private sector, business owners have been prosecuted for not paying over PAYE, UIF and provident fund deductions. Beyond the ANC, state-owned entities including SAA, SA Express and Denel have, at some point, failed to pay tax, UIF and provident fund benefits, but faced no legal consequences. Political analyst Moeletsi Mbeki said the ANC becoming a tax evader is a “visible sign of its failure to govern”. “In a way, it says a lot about the incompetence of the ANC. Not paying tax tells us that the ANC is above the law. It doesn’t have to follow the laws of SA but requires the public to do so.”

The ANC has a long history of cash problems.

Former ANC treasurer-general Zweli Mkhize presented a financial report to the Nasrec elective conference in 2017, showing that the party was sailing close to the wind at the time. The report, first reported on by City Press, indicated that the ANC was R215-million in debt and had a deficit of R47-million (the amount that its expenses exceed revenue by) – rendering the party insolvent.

Like other political parties, the ANC generates its revenue mostly from private donations. Between 2013 and 2017, the ANC collected R2.6-billion in donations – funds that were spent on funding national and municipal election campaigns (R750-million), honouring debt payments and paying staff (about 30% of the total donations went to the party’s salary bill).

The party’s finances are still in the red, three years after Mkhize was replaced by Mashatile.

For its cash crunch, the ANC has blamed several factors: Covid-19 and an economy in the doldrums, and donors who fear exposure owing to the Political Party Funding Act, which requires every donation above R100,000 to be disclosed and caps the annual contribution of donors at R15-million. The ANC’s reputation has also taken a further knock owing to corruption over Covid-19 personal protective equipment, making donors nervous about being associated with the party.

Political analyst Dr Ralph Mathekga said the reasons for the ANC’s cash problems go further, adding that how the party receives funding from its donors doesn’t inherently allow for proper financial management and accountability. “You will be shocked at how the ANC is run. If they don’t have money for salaries, a comrade will directly approach a donor and get millions of rands. This process is run outside of formal Luthuli House structures,” said Mathekga.

The Mail & Guardian recently reported that Mashatile and ANC Deputy President David Mabuza received at least $2-million from donors but the money failed to make it into the Luthuli House bank account. ANC President Cyril Ramaphosa is reportedly vexed by this and has refused to help the party with its current funding crisis.

Mathekga said the ANC’s financial problems give further evidence that it doesn’t have the legitimacy to govern the country’s finances when it fails to efficiently run its own.

“The ANC cannot even do the basics of disciplining its own members to make sure they follow their own rules. The party is already crumbling, and its problems are structural. Even if the ANC raises funds through crowdfunding, its problems will still be there because it has failed to modernise and reform itself institutionally.”

For Ongama Mtimka, a political analyst, the ANC’s financial problems signal the imminent death of the party ahead of the upcoming local government elections. “The party cannot be saved from its death. All that matters is to control the manner of its death so that whoever is in control of the party is in a position to rebuild it in the way that they want. The ANC that we know, one that has emerged post the 1994 era, its time is up. If not, its crisis will show up in huge electoral losses in the short term or a financial crisis that pushes it into extinction.” DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.

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All Comments 52

  • If they can’t hold their party to account, how the hell can they run a country! No wonder we’re at Junk status, hobbled by debt with the highest unemployment rate even amongst struggling emerging markets. Time to change the governing party and let the minority take charge again. Anything is better than this slide into a black hole of mismanagement ( at best) and corruption ( at worst)

      • The problem is the ruling party are doing everything they can to ensure our education remains at the lowest rungs in the world, leaving millions with a sub-standard to almost zero education. This is one of the biggest crimes inflicted on our younger population (arguably in an attempt to leave them voting with their hearts and not their brains?).

        • Really, Gordon? That’s the political strategy you think the ANC has? You may be confusing it with Verwoedian policies. Have you even read an education policy paper in the last 5 years? Let me get you: you think a governing party that can’t seal up pit latrines in schools has some grand Illuminati scheme, like Dr Evil or Dr Who, to keep people uneducated? I think the reality is a whole lot more humble, and it’s sheer bureaucratic incompetence. But hey, who doesn’t like a little conspiracy theory?

  • This is the party that, through incompetence, corruption and arrogance destroyed South African Airways, Eskom, Denel, SABC and a host of other successful government owned businesses.
    How on earth would you expect those same delinquents to be competent enough manage their own political party?

  • Watching the ANC destroy the country is like watching a car crash in slow motion. Nothing really we can do about it.
    Which is why I absolutely love watching the criminal syndicate destroying themselves. I cannot wait for the final nail in the ANC coffin.

    • The next step should be Edward Kieswetter should pounce onto the ANC with criminal procedures. SARS must do their bloody job and stop threatening law abiding citizens.
      The hawks should arrest everybody in the ANC finance department. What they did, not paying UIF while deducting it from salaries is accounting fraud.

      • Is there any way in which we can force Mr. Kieswetter and his colleagues to simply do what would be done to you and me should we have failed to pay pAYE, UIF, pension contributions – WHY has nothing been done – four years later – and this did not start in 2021 either. Maybe Ace has some more things to answer for…probably!

  • Employees, over to you. If “Mashatile and ANC Deputy President David Mabuza received at least $2-million from donors but the money failed to make it into the Luthuli House bank account” create a legal fuss as this would help. How much more?

  • Some of the ANC leadership could fix this with a quick bank transfer this morning. Seems a bit miserly to not do so in view of the fact that a leadership position in the ANC mostly facilitated some of the mind boggling wealth accumulated …

    I wonder who is to blame for this? Something in the past? Or perhaps a group of people from another place? Possibly Covid?

    • Clearly nobody gives to the ANC out of any belief that they can run a decent government. Any and all donations ever received by the ANC have been given to generate 1000% ROI through corruption. Narrow that channel of trough-feeding and bankruptcy looms.

    • Some of these aNC leaders have financial logic – you will not give money to people (even your own party’s officials, that embezzle their own employees will you? I won’t!

    • Would have thought in order to receive public moneys the IEC would have mandatory compliance minimums, amongst others a tax clearance certificate or up to date financial reporting like any other NPO or PTY in a similar position. Turns out such minimums do not exist.

  • Yet another example of the arrogant and disproportionate approach by SARS – quick to levy ridiculous penalties for taxes paid late by one day yet turn a blind eye to the likes of the ANC who it appears are years, not days, behind in paying over their taxes. Mr. Kieswetter is not at all apologetic and neither shows any shame for the different treatment. And what about the many high-level corrupt officials and Gupta styled thieves still enjoying the fruits of theft and corruption – at our expense with not a single arrest or action to recover the money by NPA or SARS who remain silent. What message does this send out honest taxpayers?

    • The message is quite clear and your president has articulated the fact at the Zondo commission – the anc and it’s cadres and deployees are all that matters. The rest of the country is irrelevant.

  • Moeletsi Mbeki said it best “In a way, it says a lot about the incompetence of the ANC. Not paying tax tells us that the ANC is above the law. It doesn’t have to follow the laws of SA but requires the public to do so.”

  • If I read this correctly the people that made the allegations against the leadership left Ace off the list? If that is correct then the allegations are probably false.

  • I think this is fake news put out by the Magashule contingent to discredit the ANC. I cannot believe the workers at ANC would continue working after all this has been going on for so long. And where are the Trade Unions? Would they allow this to happen to their members? I think you have to read this story with a very big pinch of salt.

  • Morning CR, I’ve been holidaying in Namibia for 3 weeks. Lovely country just like SA. But they have good roads, wonderfully friendly people who appreciate tourist support from around the world and most things work with little “fear” of violent attacks. About the Africans Nationalising Corruption salaries, why not just steal some more in black bags, pay them via the backdoor and duck the statutory payments. You must be sooo proud of the organisation you lead whilst continuing to allow it to be as illegal as the old SA government and its sanctions-busting operations. Nice one!! And you didn’t lie to the Zondo Commission, is that right ??

  • Watch out!
    The ANC will be desperate for deals and opportunities to loot – nuclear power, power ships, BIG, EWC, new national insurance fund [will 12% be enough?], new national health plan, spectrum licencing. What have I forgotten?

  • How come the very wealthy president of the ANC( and of the country) didn’t chip in to help his beloved organization? Surely he can see it has a desperate need of funding? Perhaps he is afraid any monies would be hijacked into a comrade’s pocket before reaching its proper destination?

  • CR is vexed about R2m donated but then “disappearing”. Vexed is for minor irritations not massive theft. Why are political parties not audited?Anyway, they are running the country like the party – so much loyalty and respect for those who suffered and died for the party. Those huge personal sacrificed were made to create a better society, not to create a kleptocracy. Shame on them.

  • Something doesn’t seem quite right.
    Employess were fully aware that their UIF, PAYE & Medical Aid deductions were NOT paid to the relevant authorities BUT they’ve kept quiet for years?
    What happened when they had to visit the doctor/be hospitalised/have major surger?
    Unless they used Govt hospitals, pretending to be unemployed?
    3. Why did they not contact their unions?
    4. As registered tax-payers, did they not submit returns?
    5. Why did they threaten to lay serious charges – against the
    top 5 of the ANC & suddenly pull out of their intended action?
    6. Why did they conveniently omit Ace Magashule’s name?
    7. How many of these “employees” are legitimately employed at Luthuli House?
    8. Have people have just been added to the payroll as each new SG assumed office?
    9. If an independent audit were to be administered, is it possible that ‘ghost’ employees may be outed?
    10. Just about everything in the ANC seems to suffer a serious condition of blurred lines – from conflating Party with State to paying for the legal fees for politicians in criminal cases brought on by their own criminal/fraudulent actions for which they should be paying out of their own pockets. I would not be at all surprised to find among the ’employees’ many hangers-on who may have been put on the payroll for purposes other than an actual administrative role function that had a proper job description and genuine deliverables; a case in point is old Carl Niehaus. What vacancy was he employed in?

    • They did not list Ace in their ‘charges’ … because they think his “stepping aside” (against his will on top of it!) ‘absolves’ him from his many years of involvement ! How is that for ANC logic … makes perfect sense … to a dodo like me even !

    • This is why my sympathy for ANYBODY who votes for the ANC is zero at the moment.
      You get what you vote for.
      ZERO charity from me going forward.

  • “ANC President Cyril Ramaphosa is reportedly vexed by this and has refused to help the party with its current funding crisis.” Hang about. The leader (?) of this political and moral embarrassment of a party is refusing to help his comrade cadre tjommies? Kinda makes you wonder how invested he is in his beloved party. Allegedly a billionaire, parsimony – the blight of more or less all money hoarders – is not a good fit for Cyril and his squirreled cash. Magnanimity should be his default position except, you know, he, like all of his buds, are as bent as a nine bob note.

  • Where is the voice of “big business” in the midst of the never ending carnage engulfing this country? There is a daily smorgasbord of theft, corruption, economic idiocy, government incompetence and yet “big business” is silent. When will they stand up and use their undeniable clout to draw a line in the sand? Indeed,; when?

    • Too scared to be called white monopoly capital? Just do what mugabe did, and print more money. Don’t worry about gold reserves, who’s going to check??

  • We should not be surprised, yet make the best of a shitty situation.
    a) The country is a mirror image of a bankrupt party.
    b) The ANC is not interested in truth and reluctant to see justice done.
    c) the ANC is in its death throes and we should assist it with all we have in moving it to the great beyond.
    d) Excuses and complaining does not help.
    c) All right-thinking citizens together with business and principled political players irrespective of their party affiliations have to get together to get the ship called SA afloat again.

  • It’s about time we passed legislation to require registered political parties to publish audited financial statements. Are parties required to account for the money they get from the public purse?

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