Some tenuously connected thoughts about political risk and financial markets in recent South African newsflow:
For whom the bell tolls
The marginal victory of Cyril Ramaphosa at the ANC conference at Nasrec in December 2017 immediately raised the matter of ‘key person risk’ inherent in having one portly fellow as the absolute lynchpin of the weak hold the ‘reformists’ had won on the top structures of the ANC.
Then it was: what if he trips and bangs his head? The billions of rand that had flown in and out of financial markets on Ramaphosa’s marginal victory seem to me, anyway, not to have considered adequately that DD Mabuza, Ace Magashule, and a swathe of nervous crooks who had benefited from State Capture, were the only people waiting in the wings.
I am reminded of that risk by the ever more visible deaths from the Covid 19 pandemic – most obviously to local observers that of Jackson Mthembu and four Zimbabwean cabinet ministers. With South Africa having failed to position itself to take advantage of the various vaccines, one has to realise that as time passes it is likely that more people will die. I think it will feel like a net is closing.
Key person risk, attached to the person of Cyril Ramaphosa, remains. Who exactly is waiting in the wings if the presidency post suddenly had to be filled may be a more complicated question that in was in December 2017, but it is as uncertain and unsettling now as it was then. I am not arguing that the pandemic increases that risk, purely that it brings it to front of mind again.
Molefe Swings Wildly at Cyril Ramaphosa at Zondo Commission
I remember Brian Molefe when he ran (with the excellent Phakamani Hadebe) asset and liability management at the National Treasury in the early 2000s. He was, then, in my estimation a likeable and impressive public servant. Which probably means I shouldn’t make snide remarks about the weeping, self-pitying Gupta asset and the Saxonwold Shebeen. So I won’t.
Molefe’s alleged hand in forcing the sale of the then Glencore-owned coal mine Optimum to Gupta owned Oakbay Investments is at the centre of the Public Protector report that brought the Zondo Commission into state capture into existence in the first place.
The story of Optimum, Tegeta, Eskom and the price and quality of coal is complicated and Molefe is accused (not in a court of law) of having used Eskom’s finances and leverage to force the mine out of Glencore’s hands and into the Guptas, in a particularly sweet (for the Guptas) deal.
Molefe’s strategy was to argue that Cyril Ramaphosa was actually guilty of precisely what Molefe was being accused of. As if pulling a rabbit out the hat, he revealed that Cyril Ramaphosa was the chair of Optimum, joint owner (and BEE partner as the Mining Charter required) and conflicted as deputy president and convenor of the ‘war room’ set up by government to address the Eskom and electricity supply crisis.
The specific narrative here is a fine example of fake news. Ramaphosa divested himself of any assets that could cause a conflict of interest as well as board memberships immediately after his elevation to the Deputy Presidency in May 7 2014 (and actually began this process in 2012). The so called ‘war room’ was only established in December that year and Molefe was only appointed Eskom CEO in February 2015. The dates are important because Molefe’s evidence was a Trumpian self-portrayal of of his (Molefe’s) fight against Ramaphosa in alliance with white monopoly capital. See summary of some of the details from Daily Maverick here and for those with more time on their hands, a great summary of Glencore’s evidence to the Zondo Commission covering the Optimum saga, also on Daily Maverick here.
There are lots of different interests at play here, but I think the main angle is that this is a skirmish in the ongoing factional struggle being played out in the ANC. At least one of the strategies of the camp Molefe is apparently aligned to is to attempt to discredit Ramaphosa, especially to suggest he is corrupt. Given from whence it comes, the accusation does not appear to be gathering momentum, and Ramaphosa has stated publicly that he will resign if he is charged with corruption.
Political Party Funding Act
The presidency has announced that long awaited legislation limiting and opening for public scrutiny – through reporting requirements to the IEC – political party funding will become law from April 1 – see statement here for details.
This is an important anti-corruption reform and I – for one – am surprised and impressed at how tight it is. Seen as part of Ramaphosa’s attempts to roll back the corruption that had taken hold of our public life it is definitely positive.
However, perhaps the more serious influence peddling, pork belly politics and straight forward corruption has taken place within the ANC and, up until now, hidden from any form of public scrutiny. Where one party is as dominant as the ANC has been from 1994 to the present, the real money will be the investment in campaigns of particular leaders for party president – in part because the party president will (up until now) become the country president and head of government.
The current Public Protector who investigated money moving through the various accounts that was used by the CR17 campaign – the internal ANC campaign that led to the tight victory of Cyril Ramaphosa at the December 2017 ANC conference – has had her report set aside in the Pretoria High Court using some of the most disparaging language about her motivations and understanding of the law in the long list of judgements against her. However, the process has revealed that electing and ANC president costs in the region of R400m and the one of the bigger expenses is the paying of membership fees for many thousands of ‘ANC members’ around the country.
Now this might not have come as a surprise to those who watched Jacob Zuma’s successful campaign leading to his election at the Polokwane national conference in 2007. But it should be clear that if the ‘money politics’ in the ANC is not part of the anti-corruption reforms being led by Cyril Ramaphosa across a broad front, the battle is lost. This requires a discussion about means and ends. Cyril Ramaphosa would not have been president if he wasn’t prepared to get down and dirty. But perhaps that’s enough for now.