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Russia drama spells out why SA needs more eyes on political funding

Russia drama spells out why SA needs more eyes on political funding
From left: DA leader John Steenhuisen. (Photo: Gallo Images / Misha Jordaan) | President Cyril Ramaphosa. (Photo: Thierry Monasse / Getty Images)

Lobby group My Vote Counts on Tuesday launched a legal challenge to the Political Party Funding Act, arguing that it is nowhere near sufficiently stringent in ensuring transparency around private donations. The current diplomatic fracas around South Africa and Russia offers some evidence of why the group’s quest is important.

‘By their many recent actions, it is clear the ANC is firmly aligned with Russia,” DA leader John Steenhuisen wrote in a statement on Tuesday.

“This should surprise no one, since Russians are financing the ANC. The R30-million of declared funding of the ANC by Russian oligarch Viktor Vekselberg, who with the ANC’s funding front Chancellor House is joint owner of United Manganese of Kalahari, is likely only the tip of the iceberg.”

Steenhuisen did not spell out how we know about that funding, but we owe that knowledge to the Political Party Funding Act — legislation that the DA, and virtually every other party, was highly ambivalent about during its development.

Meet Viktor Vekselberg

Vekselberg is a Russian businessman who is reportedly a close ally of President Vladimir Putin. US sanctions were first imposed on him in 2018, some time before the invasion of Ukraine, as a result of what the US Treasury called “worldwide malign activity” from a number of oligarchs “who benefit from the Putin regime”.

When it came specifically to Vekselberg, the US Treasury wrote:

“Viktor Vekselberg is being designated for operating in the energy sector of the Russian Federation economy. Vekselberg is the founder and Chairman of the Board of Directors of the Renova Group. The Renova Group is comprised of asset management companies and investment funds that own and manage assets in several sectors of the Russian economy, including energy. In 2016, Russian prosecutors raided Renova’s offices and arrested two associates of Vekselberg, including the company’s chief managing director and another top executive, for bribing officials connected to a power generation project in Russia.”

That description is the tip of the iceberg when it comes to Vekselberg’s history. Court papers filed against Vekselberg in 2022 give a more complete account. As far back as 2001, Vekselberg was accused of using armed soldiers to “gain control of a Siberian oilfield”. In 2004, Russian media reported claims that the businessman had been involved in the theft of client bank funds, the proceeds of which he allegedly used to buy Fabergé eggs. Allegations of racketeering, money laundering and bribery have trailed Vekselberg through the years.

In 2022, the US Treasury applied a new set of sanctions on Vekselberg following the Ukraine invasion. Here, it noted that Vekselberg “has maintained close ties with leading [Russian] officials, including President Vladimir Putin and former Russian President, Dmitry Medvedev”.

The US Treasury wrote that Medvedev had personally appointed Vekselberg to serve as director of a Russian Silicon Valley-type initiative.

“Furthermore, Vekselberg has taken part in Russian diplomatic and soft power activities on behalf of the Kremlin, accompanying [Russian] officials on cultural missions abroad,” it added.

What the funding disclosures say about Russia and the ANC

Vekselberg makes his first appearance in the first set of funding disclosures required by law from political parties after the promulgation of the Political Party Funding Act, in September 2021.

He does so indirectly, in the form of the company United Manganese of Kalahari. As News24 has previously reported, United Manganese of Kalahari (UMK) was formed in 2011 as a joint venture between Vekselberg’s Renova group and local BEE investors, including the ANC’s investment vehicle Chancellor House.

Vekselberg sold down his share after the 2018 imposition of US sanctions, but he still owns 25% of the fund that replaced Renova in UMK’s ownership, New African Manganese Investments Limited.

UMK has been a steady and generous donor to the ANC, it appears. The party funding reports published by the Electoral Commission so far record as donations from UMK:

  • Quarter 1 2021/2022: R5-million declared by the ANC;
  • Quarter 4 2021/2022: R10-million declared by the ANC; and
  • Quarter 3 2022/2023: R15-million declared by the ANC.

In other words, there is evidence from the ANC itself that funds linked to one of Putin’s allies are helping keep the party afloat. We cannot say for certain whether this is a further reason, beyond historical loyalty, for the ANC government’s stance towards the Russia/Ukraine conflict — but many, like the DA’s Steenhuisen, will speculate as much.

Political party funding needs more transparency, not less

If it were not for the party funding disclosures now required by law, there would be nothing on public record to prove that the ANC directly benefits as a party from Putin-linked funding.

Of course, it is highly likely that the funding declarations — for all parties — do not represent the full picture of benefactors. Steenhuisen noted as much in his Tuesday statement, writing: “Most Russian funding of the ANC is likely under the table and undeclared.”

While there is probably little that can be done if political parties are intent on illegally concealing donations, and are skilled at doing so, the principle highlighted by the current Russia saga is that more transparency around political funding is better for both the rule of law and democracy.

The current legal challenge being brought by the NGO My Vote Counts strongly argues that the legislation should be strengthened to that end.

The Political Party Funding Act, the group maintains, is “woefully inadequate in respect of providing access to and the proper disclosure of all private funding information, and further fails to safeguard against the threat of corruption and ultimately state capture, and in fact leaves the door open for such corruption”. (The reforms to the law that My Vote Counts is calling for are detailed here.)

As weak as the current regulations are, and toothless as the Electoral Commission has seemed in enforcing them so far, they have provided South Africa with one of the only possible clues as to the real nature of the ANC’s relationship with Russia. Stricter party funding disclosure laws, more forcefully implemented, seem a dream worth striving for. DM


Comments - Please in order to comment.

  • Miles Japhet says:

    The banks in SA need to intensify the tracking and reporting of suspicious transactions in contravention of the law involving political parties. This should extend to the individuals in senior party positions.

  • djmarais says:

    Follow the money – and not just party donations, but all other types of glad-handing. R30M is a drop in the ocean.

  • Derek Jones says:

    The ANC has been captured. accepting funding from Russia. How stupid can you get?

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