Business Maverick

BUSINESS REFLECTION

After the Bell: Is United Manganese of Kalahari a ‘foreign person’?

After the Bell: Is United Manganese of Kalahari a ‘foreign person’?
From left: Russian oligarch Viktor Vekselberg. (Photo: EPA-EFE / Anatoly Maltsev) | President Cyril Ramaphosa. (Photo: Leila Dougan)

Is it possible that the ANC’s cuddling up to the Russian bear is simply a matter of political finances? Could it conceivably be that simple — or that craven?

I don’t think so, but if you join the dots, it’s at least a contributing factor. Some of the dots, in this case, have been reported on before, most recently by my colleague, Rebecca Davis.

Read more in Daily Maverick: Russia drama spells out why SA needs more eyes on political funding

What she finds is that since the Political Party Funding Act came into force in April 2021, by far the biggest single donor to the ANC has been United Manganese of Kalahari (UMK), which has donated a total of R30-million to the party.

R15-million is the maximum amount allowed by the legislation; the donations, which happened over two years, means they are maxed out. 

UMK is 25% owned by Russian oligarch Viktor Vekselberg, one of Russian President Vladimir Putin’s pocket oligarchs. Much of the remainder of UMK is owned by the ANC’s commercial arm, Chancellor House.

In case you are feeling sorry for poor UMK, which has to dole out much of its hard-earned lucre to the ANC, don’t worry too much. The company is making money hand over fist.

Even though its financials are not published, we know this because other manganese companies also mining in the Kalahari have been raking in small fortunes during the ongoing commodity boom.

We also know this because the company is in dispute with the SA Revenue Service over a R351-million tax assessment for just three tax years – 2011, 2012 and 2013.

It’s such a drag when you are, essentially, the government, and you have to pay taxes that the government has decided everybody else has to pay. The dispute is still pending a decade later. Obvs.

And as for Vekselberg, no need to shed a tear for him either. Even after Russian sanctions were put in place, Forbes has him down as being worth $6.7bn (R130bn), which made him the world’s 360th most wealthy person.

Foreign influence

To me, this opens up a different question: Given that one of the main motivations of the Political Party Funding Act was to prohibit foreign influence on SA’s politics, why is the IEC allowing this donation? Isn’t this precisely the situation where government policy is, or at least could be, distorted by foreign donations?

Even parts of government – or, more specifically, the Treasury – are worried about cosying up to the bear. In his budget vote on Tuesday, Finance Minister Enoch Godongwana warned that handling the issue of selling arms to Russia poorly “will impact on the livelihoods of many people in the relevant companies and sectors”.

He went further. He pointed out that it’s not just a matter of trade under the African Growth and Opportunity Act or the support under the President’s Emergency Plan for Aids Relief – which is now two decades old and cumulatively has cost the US taxpayer about $100-billion – but there may also be a potential harm to the currency, to trade in general, and to foreign direct investment, he said.

African peace mission

It’s weird how the only sensible-sounding government department is often the Treasury. And it is even weirder how the Treasury is just ignored. As Godongwana was making this statement, the presidency announced that President Cyril Ramaphosa would lead the presidents of six African nations on a visit to Russia and Ukraine, to meet their respective heads of state to talk peace.

Obviously, that sounds like a great idea. But even here, there is a problem: Four out of the six countries in the group to accompany Ramaphosa abstained in a UN vote last year condemning Russia’s invasion. Those four countries are SA, Republic of Congo, Senegal and Uganda. Zambia and Egypt voted in favour. 

In the same vote, 28 of 54 African countries voted in favour of condemning Russia. A total of 17 abstained. To be representative of the continent, the group ought to consist of at least four or five countries that voted in favour of condemnation and one or two that did not – not the opposite. 

This group purports to represent the continent, but does not. And this, sadly, is according to the pattern: SA pretends to be neutral and pretends to want a solution, but leans heavily toward Russia.

Influence

Anyway, back to the ANC’s financial problems, and to what extent government policy might be being affected by foreign financial donations. 

Of course, the definition of a “foreign person” in the Political Party Funding Act excludes companies registered in SA. So then it might appear that there is no danger the IEC could deem this donation prohibited under the “foreign person” exclusion (not that the ANC-controlled IEC would, but, you know, just theoretically).

However, it’s a bit more complicated than that.

Company law deems “control” to be a bit of a fungible concept. Obviously, if you are a majority shareholder, or if there are different classes of shares, you may have undisputed control. Control issues are, of course, very relevant in related party transactions, and even people with small shareholdings can, in certain circumstances, be considered in “control” of a company. 

In the UMK case, it’s hard not to notice that three of the six directors either directly or implicitly represent Vekselberg. 

Mogopodi Mokoena represents Chancellor House, Lazarus Mbethe represents the BEE group Pitsa Ya Setshaba, and Khanyisile Kweyama is Prasa chair, which suggests she is an ANC deployee.

Maksim Goldman and Konstantin Sadovnik represent Vekselberg, and Marco Musetti is on the metals desk of a Swiss bank – my guess would be the same one where Vekselberg holds his not-insubstantial account.

I think there is a good chance that, despite only having a 25% interest, it wouldn’t be outrageous to consider UMK a “foreign person” under the Political Party Funding Act. Even if it is not, isn’t the entire intention of the act to discourage foreigners from influencing SA’s domestic policy? 

I’m willing to bet that if you were a US presidential hopeful and a company 25%-owned by a Russian oligarch were to offer you some campaign cash, you wouldn’t touch it with a barge pole.

But that is not our way – clearly. DM

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